Only 133 housing markets saw prices decline in February

At the height of the correction in September, 303 of the nation’s 400 largest housing markets saw a month-over-month home price decline as measured by the seasonally adjusted Zillow Home Value Index (ZHVI). In October, 292 of those major markets registered a decline. The figure of down markets then fell to 245 in November and 256 in December.

Fast-forward to 2023, and that correction has clearly lost geographical momentum. In January, 171 of the nation’s 400 largest housing markets registered a month-over-month home price decline. And in February, just 133 of the nation’s 400 largest housing markets registered a month-over-month home price decline, while 267 housing markets saw a month-over-month increase in home prices.

To better understand the ongoing home price correction—or lack thereof—let’s take a closer look at the February data. (Keep in mind, the Zillow Home Value Index only measures home values that are in the 35th to 65th percentile, price wise, in a given market.)

As mortgage rates began to spike in 2022, Western markets like Seattle, Boise, and San Francisco were among the very first places to see falling home prices. As the year progressed, and mortgage rates continued to rise, that correction slowly started to spread east.

However, that momentum has already stalled: Through the first two months of 2023, many small and mid-sized markets in the Midwest, South, and Northeast have shifted from correction-mode to growth-mode. Meanwhile, many Western markets, like Boise and San Francisco, continue to post home price declines.

Unlike overheated Western housing markets, many Northeast and Midwest markets remained closer aligned to fundamentals during the Pandemic Housing Boom. That put those markets in a better position to weather the affordability crunch brought on by last year’s mortgage rate shock.

Now that home price growth is returning to more markets, does that mean the home price correction is nearing its conclusion? Experts are divided.

Heading forward, CoreLogic expects the home price correction to fizzle out nationally, and for U.S. home prices to post a 3% gain between December 2022 and December 2023.

Meanwhile, KPMG expects the home price correction to pick up steam later in the year once the peak spring season is over and as the economy begins to weaken. This year, KPMG expects U.S. home prices as measured by the Case-Shiller Index to fall 8%.

“The S&P CoreLogic Case-Shiller Home…