Regional Divergence in US Housing Market Accelerates in Q1

At Parcl Labs, we closely monitor real-time changes in the housing market. Since the real estate market showed signs of slowing in late summer 2022, we have been tracking region-specific trends in the housing correction.

In this report, we break down regional trends and analyze the underlying factors that are contributing to the changes within markets. From the West vs. East Coast divide to the impact of property age and type, we explore the nuances of the US housing market to help you make informed decisions for your data-powered real estate business. Read on to discover what we've uncovered and what it means for you.

Key Findings:

• The coastal divide in US housing markets is deepening. Markets west of Texas are now seeing negative year-over-year housing prices.
• The regional divergence trend holds true when analyzing 2022 peak-to-current price changes. While all markets have experienced declines (as expected due to rising mortgage rates), the decline has been much more drastic in West Coast regions.
• The Pacific region is down nearly 15% from its 2022 highs. The worst performing market within the Pacific region is San Francisco, which is down 24.3% from its 2022 peak. In comparison, the South Atlantic region is down 6.6% overall from its 2022 high, with Miami down just 4.5%.
• Across most regions, condos have witnessed sharper price declines than single-family homes. The Middle Atlantic condo market has been hit especially hard, down 20% since its 2022 peak.
• Newer homes have generally been more resilient to downward price pressure. However, new home performance depends heavily on the age distribution of homes within each market. Younger markets, like Mountain and South Atlantic, have seen brand new homes actually sell for a discount relative to homes just a few years older.
• Parcl Labs' analysis demonstrates that the local real estate context matters. We analyzed every region at the MSA level to uncover market trends that are influencing regional performance.

Property Type and Age Matters: Largest Losses Seen in Regional Condo Markets and Older Homes

We analyze region-based real estate prices based on contextual factors, including property type and age of the home.

In our peak-to-current analysis segmented by property type, we find that both the condo and single-family home markets are declining across 7 of 8 regions (we excluded West North Central from the analysis due to outliers). The East South Central condo housing market was the only segment that has seen higher prices (up 1%) compared to 2022 highs.

Conversely, condo housing markets in the Mountain and Pacific regions are in a particularly steep decline, down over 15% from their 2022 peaks. Condo housing market performance in these regions is slightly worse than single family housing results.

The worst-performing regionally specific property segment overall is the Middle Atlantic condo market, down 20% since its 2022 high. The declines observed in the Middle Atlantic condo market are three times worse than single family homes (-6.1%) within the same region.

Similar to property type findings, there is limited good news when analyzing home price performance peak-to-current by home age segment. For our age-price analysis, we break down homes into four categories:

• Brand New Homes (0 years old)
• Young Homes (1-5 years old)
• Middle Aged Homes (5-25 years old)
• Older Homes (25+ years old)

We then assess the price performance of these age cohorts by region. In 7 of 8 regions, older homes (25+) have seen the greatest price depreciation since their 2022 highs. The Middle Atlantic housing market is the only exception due to its extremely negative results across homes 1-5 years old; these young Middle Atlantic homes are down over 40%.

The graph below demonstrates that brand new and young homes have generally been more resilient to the recent price declines. However, there are regionally specific nuances underlying these results that may be related to the age distribution and makeup of homes within these markets.

For example, in New England, homes sold are typically older. In the past 12 months, the average home sold in the New England housing market was 59 years old, ranking second oldest overall relative to other regions (see graph below). In the same time frame, brand new homes in New England were selling for a premium, up nearly 3% since their 2022 peaks. The New England brand new home segment is the best-performing region and age-based segment overall, demonstrating the impact of supply on price.

In regions with younger housing markets, brand new homes appear to be selling at a discount compared to 2022. The Mountain, Pacific, South Atlantic, and West South Central housing markets are in the younger half of regions based on the average age of homes sold. These same regions have observed larger price declines for brand new homes, on a percentage basis, versus homes that are just a few years older. The Mountain region, which contains frothy, fast-growing pandemic boomtowns such as the Phoenix housing market and Las Vegas housing market, has the youngest average age of homes sold (28 years old) and the most significant price decreases for brand new homes (-11.4%).

Local Context Matters: MSA Level Trends Highlight Sub Regional Trends

At Parcl Labs, we understand that regional housing markets are not the same. We used advanced real estate data, updating daily, to understand the dynamics across every housing market in the country. Each region is unique, with its own subregional context and market performance. Therefore, we took our data analysis a step further and looked at peak-to-current prices at the MSA level within each region. Note that for an MSA to be included in this data analysis, at least 5,000 sales transactions needed to occur over the past year.

Pacific Housing Market

The Pacific region, which includes California, Oregon, and Washington, is currently the worst performing region in the US housing market, with prices down nearly 15% from their 2022 highs.

Off peak prices range from -24.3% in San Francisco housing market to -7.5% in the Eugene housing market. The top three MSAs in terms of price performance are Eugene (-7.5%), Oxnard (-8.9%), and Fresno (-9.3%). Meanwhile, the worst three MSAs are the San Francisco housing market (-24.3%), Spokane housing market (-23.8%), and San Jose housing market (-20.1%).

South Atlantic Housing Market

The South Atlantic is a large region with diverse real estate markets, comprising Florida, Georgia, South Carolina, North Carolina, Virginia, DC, Maryland, and Delaware. The region as a whole has seen a decline of 6.6% since its 2022 peak.

The range of performance in this region is from up 1.4% in Palm Bay to down 20.3% in Salisbury. Interestingly, this region contains the only MSAs included in the analysis to actually see price increases from 2022 highs. The top performers within the region are Palm Bay housing market (1.4%), Hilton Head housing market (up .04%), and Virginia Beach housing market (-1%), while the worst performers are the Salisbury housing market (-20.3%), Macon housing market (-18.4%), and Baltimore housing market (-16.8%).

Mountain Housing Market

The Mountain region, consisting of Colorado, Nevada, and Arizona, has experienced a significant decline of 12.8% from its 2022 highs, with off-peak values ranging from -17.0% (Lake Havasu housing market) to -8.2% (Fort Collins housing market). We find that the Mountain region’s price correction is relatively consistently across its MSAs — the range across markets is only 9%, compared to other regions that have witness 20-30% swings.

Fort Collins housing market (-8.2%), Tucson housing market (-8.6%), and Las Vegas housing market (-10.8%) were the top three MSAs in terms of price performance, while Lake Havasu (-17%), Greeley housing market (-16.5%), and Colorado Springs housing market (-13.9%) were the worst three MSAs. This region, which includes many pandemic boomtowns such as Phoenix and Las Vegas, has been hit particularly hard by the US housing correction.

New England Housing Market

The New England region has seen the largest decline in housing prices on the East Coast, down almost 11% from its peak in 2022.

The region, which contains Connecticut, Massachusetts, New Hampshire, Vermont, and Maine, has off-peak prices ranging from -15.3% (in Bridgeport) to -3.7% (in Manchester). The top three MSAs in terms of price performance are Manchester housing market (-3.7%), Portland housing market (-8.0%), and Hartford housing market (-8.3%). Meanwhile, the worst three MSAs are Bridgeport housing market (-15.3%), Springfield housing market (-12.6%), and Boston housing market (-12.0%).

Middle Atlantic Housing Market

The Middle Atlantic region, which includes Pennsylvania, New York, and New Jersey, has seen 7.7% price declines off 2022 highs.

Peak-to-current prices range from -26.3% (Buffalo housing market) to -3.6% (Poughkeepsie housing market). The region follows the same pattern as the rest of the US, with price declines worsening the further west you go. The worst three MSAs in the region are the farthest west, with the Buffalo housing market (-26.3%), Pittsburgh housing market (-24.1%), and Rochester housing market (-18.8%) experiencing the largest declines. The best performing MSAs border the eastern edge of the region, including Poughkeepsie (-3.6%), Atlantic City housing market (-5.3%), and Lancaster housing market (-6.1%).

East North Central Housing Market

The East North Central region is made up of Wisconsin, Illinois, Indiana, Ohio, and Michigan, and has seen an overall 8.9% decrease in prices from their 2022 highs. Across East North Central's MSAs, housing prices have decreased from -30% (St. Louis) to -3.9% (Milwaukee) from peak to current.

The top three MSAs in terms of price performance were the Milwaukee housing market (-3.9%), Indianapolis housing market (-4.3%), and Green Bay housing market (-4.5%). The worst three MSAs in terms of price declines were St Louis housing market (-29.3%), Davenport housing market (-23.5%), and Flint housing market (-22.4%).

East South Central Housing Market

The East South Central housing market has seen the least decline in prices off 2022 highs, down only 5.5%. The region includes Kentucky housing market, Michigan housing market, Alabama, and Tennessee.

However, there is still significant variation in performance within the region, with off-peak prices ranging from -22.5% in the Knoxville housing market to -6.7% in the Lexington housing market. The top three MSAs in terms of price performance were the Lexington housing market (-6.7%), Nashville housing market (-7.4%), and Daphne housing market (-7.6%). Meanwhile, the worst three MSA results were the Knoxville housing market (-22.5%), Memphis housing market (-22.0%), and Birmingham housing market (-15.8%).

West South Central Housing Market

The West Coast Central region contains Oklahoma housing market and Arkansas housing market, and is down 7.8% across the region. With four MSAs meeting the criteria for analysis, the Tulsa housing market has seen the most price depreciation at -7.8%, followed by Little Rock housing market (-6.8%), Oklahoma City housing market (-6.2%), and Fayetteville housing market (-4.1%).

West North Central Housing Market

The West North Central region, which includes Nebraska, Iowa, and South Dakota, has experienced the second-worst regional performance overall, with a 14.3% decline across the regions housing market. Only the Pacific region has seen more losses. The Des Moines housing market experienced the greatest price depreciation at -15.9%, followed by Lincoln housing market (-8.0%) and Omaha housing market (-7.6%).

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