Are home values declining — or is home value appreciation slowing?

A Credit Karma Study

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As of July 2022, sales of existing homes declined for the sixth month in a row, down 5.9% from the previous month and down 20.2% from July 2021, according to the National Association of Realtors®. While the price of homes is still up compared to last year, the median sales price for a home is down about $10,000 from June 2022’s record high.

With home prices and home sales down, mortgage interest rates rising, and available for-sale inventory growing, it raises a question on whether home values in the United States are taking a hit. With housing market activity slowing in many cities, is it possible that home values are declining?

To address this question, Credit Karma conducted a study of home values and their change over the last year, as well as other key data points related to housing, such as available inventory and the number of days an available home spends on the market before it sells.

The study found that while the average home value is still climbing nationally, individual U.S. cities and their housing markets have significant variations in their home value appreciation.

Read on for a closer look at whether home values are declining or if they are seeing their appreciation beginning to slow down.

Key findings on home values in America

Home values for the U.S. have continued to increase year over year. From July 2020 to July 2021, the median home value in the U.S. rose by 17.1%, from $257,067 to $300,939, according to data from Zillow. Home value appreciation accelerated even more in 2022. From $300,939 in July 2021, the median home value rose by 18.2%, to reach $355,852 in July 2022.

Although the national rates of home value appreciation were solid, many major cities in the U.S have seen significant slowdowns in their home value appreciation.

Washington, D.C., was the city with the smallest year-over-year home value growth. From July 2021 to July 2022, the median home value in Washington, D.C., rose by just 2.7%, from $689,033 to $707,647. That’s a far cry from the previous period (July 2020 to July 2021) when the median home value increased by 7.7%.

Still, it should be noted that out of the 250 largest cities in the country, none has experienced an outright decline in median home value from last year to this year. Instead, the most notable trend among many major housing markets is a slowing of the rate of home value appreciation compared to previous years.

Cities where home value growth has slowed

There are many cities where the appreciation of home values has markedly slowed down. Below is a table detailing the 20 cities where home value appreciation has been the lowest from July 2021 to July 2022.

Lowest home value appreciation July 2021–July 2022

CityJuly 2021 median home valueJuly 2022 median home valueYOY home value change (%)
Washington, D.C.$689,033$707,6472.7%
Boise, ID$509,981$526,0503.2%
Arlington, VA$808,247$836,8063.5%
Minneapolis$329,363$342,2393.9%
Alexandria, VA$608,467$638,8615.0%
Oakland, CA$933,730$981,2875.1%
Philadelphia$224,281$237,5955.9%
Pittsburgh$221,681$235,2676.1%
Silver Spring, MD$501,132$532,2456.2%
St. Paul, MN$274,693$292,9056.6%
San Francisco$1,478,496$1,576,8086.6%
Boston$695,033$743,0936.9%
Concord, CA$601,157$645,7587.4%
Jersey City, NJ$568,899$611,3357.5%
Beaumont, TX$137,334$147,8407.6%
Yonkers, NY$610,204$657,6117.8%
Fairfax, VA$662,817$716,4988.1%
New York$718,465$776,9468.1%
Shreveport, LA$121,030$131,0028.2%
Inglewood, CA$727,166$787,2998.3%

It’s important to note that while these 20 cities have experienced the lowest growth in home values year-over-year from 2021 to 2022, some of them experienced slower growth during the previous yearlong period, July 2020 to July 2021. Below are some notable examples of slower growth in 2020 to 2021 versus 2021 to 2022.

City2020 to 2021 growth2021 to 2022 growth
San Francisco5.1%6.6%
New York4.0%8.1%
Shreveport, LA4.7%8.2%

For most major cities in the study, however, the appreciation in home values over the past year was not as great as the previous year-over-year period. The most startling example of this is Boise, Idaho. From July 2020 to July 2021, Boise’s median home value rose by 45.2%, to $509,981 from $351,320. From July 2021 to July 2022, its median home value increased by a mere 3.2%.

Increasing inventory of homes for sale

Although home values are not necessarily declining, there are some indicators that activity in many housing markets might be cooling. For instance, available inventory of homes for sale has increased on the national level.

From an available inventory of 882,335 homes in June 2021, inventory grew by 14.6% to reach 1,011,013 homes in June 2022, according to data from Redfin. Compare that year-over-year change to the previous period, June 2020 to June 2021, when U.S. housing inventory plummeted by 30.7%, from 1,273,420 homes available to only 882,335 homes.

Housing inventory can be a useful indicator of housing market activity. When there’s a lot of homebuying, inventory usually declines from the previous period or year because the available homes for sale have been bought up. When inventory increases, however, it can mean homebuying activity has slowed, leading to a buildup of available homes for sale.

Greatest year-over-year growth in housing inventory, 2021 to 2022

CityJune 2021 for-sale inventoryJune 2022 for-sale inventoryYear-over-year growth in inventory
Visalia, CA25213752.0%
Renton, WA80220175.0%
Thornton, CO102277171.6%
Boise, ID382875129.1%
Bellevue, WA108245126.9%
Lancaster, CA220457107.7%
Elk Grove, CA111228105.4%
Vancouver, WA23746495.8%
Aurora, CO34966289.7%
Beaverton, OR10119088.1%

Meanwhile, in many of those same cities, home sales declined from June 2020 to June 2022. For example, in Renton, Wash., which saw the second largest year-over-year increase in inventory, the number of home sales dropped by 22.3% over the same period.

You might have noticed that these cities are on the smaller side in terms of population, and the housing inventory is small too. For comparison, the table below has the five cities with the largest inventory of homes for sale in June 2022, along with their change in inventory between June 2021 and June 2022.

Largest inventory of homes for sale in June 2022

CityJune 2022 inventory2021 to 2022 change in inventory
New York17,424-8.6%
Chicago10,95717.6%
Houston5,592-16.4%
Philadelphia4,7304.8%
Las Vegas4,71542.6%

Even though New York and Houston have a large number of homes available for sale, there are actually fewer homes available in June 2022 than at the same time the previous year. Meanwhile, Chicago, Philadelphia and Las Vegas have seen increases in their housing inventory.

The trends in inventory show that local forces are likely driving changes in inventory that don’t necessarily match the national story.

Share of homes for sale that have had price drops

An additional useful measure of housing activity is the percentage of homes for sale in a certain area that have experienced price drops. Cities with housing markets that have seen significant price drops in homes on the market could indicate a slowing housing sector. This is because homeowners and real estate agents are willing to make price cuts rather than let them sit.

After analyzing Redfin data, our study showed 10 cities that have experienced the greatest year-over-year increase in price drops of homes.

Greatest year-over-year increase in price drops of homes

CityJune 2021 percentage of active listings with price dropsJune 2022 percentage of active listings with price dropsYear-over-year change in percentage of active listings with price drops
Lansing, MI1.2%31.6%2,577.6%
Orange, CA7.6%45.6%499.8%
Cary, NC6.4%37.4%482.4%
Mesquite, TX8.3%47.4%468.4%
Grand Prairie, TX9.1%46.7%411.1%
Pomona, CA5.5%27.5%402.5%
Rancho Cucamonga, CA8.3%41.3%395.8%
McKinney, TX9.0%43.6%386.6%
Hayward, CA8.4%37.6%347.1%
Fontana, CA9.0%39.2%333.1%

You may notice that several California housing markets made this top 10 list. All six California cities in the above table also saw their median home values grow less year-over-year from July 2021 to July 2022 than they grew in the period of July 2020 to July 2021.

Increase in days a home for sale spends on the market

Another interesting data point for analyzing housing markets is the number of days on market. The metric for median days on market is the number of days between the date a home was listed for sale and the date when the home went off-market or became a pending sale. Thus, an increase in the median days on market could be an indicator of a slowing housing market.

Some major U.S. cities have experienced a major increase in the median number of days homes for sale sit on the market before being bought. Below are the top 10 cities with the greatest year-over-year increase in days on the market.

Greatest year-over-year increase in days on market

CityJune 2021 median days on marketJune 2022 median days on marketYear-over-year increase in days on market
Aurora, IL543760.0%
Naperville, IL648700.0%
Chicago, IL1554260.0%
Woodbridge, VA716128.6%
Moreno Valley, CA1124118.2%
Macon, GA1123114.3%
Beaumont, TX1838111.1%
Lancaster, CA1021110.0%
Palmdale, CA1021110.0%
Fredericksburg, VA714100.0%

Three Illinois cities take the top-three spots on this list. The largest suburbs of Chicago, Aurora and Naperville have experienced massive increases in their median days on market. Most other cities in the top 10 list doubled (or more) their median number of days on market.

Declines in home prices

Declines in the sale price of homes can be a useful indicator of housing markets cooling off. Based on the latest median sale prices from Redfin, our study found the cities with the worst year-over-year growth in home prices.

Worst year-over-year growth in home prices

CityJune 2021 median sale priceJune 2022 median sale priceYear-over-year change in median sale price
Yonkers, NY$510,500$460,000-9.9%
Canton, OH$140,000$127,250-9.1%
Arlington, VA$707,500$667,500-5.7%
Saginaw, MI$118,500$115,000-3.0%
Alexandria, VA$623,000$619,950-0.5%
New York$810,000$810,0000.0%
Salinas, CA$653,000$665,0001.8%
San Francisco$1,510,000$1,540,0002.0%
Lancaster, CA$430,000$441,0002.6%
Santa Clarita, CA$745,500$765,0002.6%

Once again, several cities in California made it onto one of our study’s top 10 lists. But the New York City area didn’t fare well either. Yonkers’ median home price dropped by nearly 10% year-over-year, while New York City proper saw no change in its median sale price.

Methodology

This study isn’t meant to be a definitive answer as to why home values are slowing in some cities. Instead, it’s an exploration of which of the 250 largest cities in the U.S. have experienced the least growth in median home value from July 2021 to 2022, as well as an examination of other housing indicators, to posit some factors influencing home values in U.S. housing markets.

Sources