A new report by the American Enterprise Institute’s (AEI) Housing Center finds that the nation’s longest home price boom has come to an end after 10 ½ years. The price of homes has fallen 3.1% since June’s peak. San Jose, Seattle, and San Francisco have led the way with decreases of 15.5%, 13.4%, and 12.7%, respectively, from their peaks. While all 60 largest metros are experiencing year-on-year price declines, San Jose, Seattle, and San Francisco have experienced the steepest declines.

Compared to a month ago, November’s Home Price Appreciation Index (HPA) was 6.7%, down from 8.5%. In March 2022, HPA peaked at 18.3%, and a year ago, it stood at 16.7%. In December 2022, HPA is predicted to decline further to 5% before declining further to 3% in January 2023.

In the 60 largest metros, the HPA varied significantly year over year. San Francisco and San Jose had 2.6% and 5.8%, while Miami and North Port had 17.8% and 15.0%.

HPA in the low price tier has historically been higher than HPA in the upper price tier. The trend remains the same. The high end of the market was hit differently than the low end despite home prices dropping across all four price tiers. Compared to May 2022, high price tier prices were down 4.6%, whereas low price tier prices were down 3.1%.

Both the months’ supply and active listings increased above seasonal trends but remained at historically low levels in November. As of November 2022, there are 2.5 months’ supply compared to 3.0 months a year earlier, up from 2.1 months in October 2022 and 0.9 months in May 2022. A month’s supply of 6.2 months in November 2022 contributed to the price weakness for the high price tier.

On the basis of the Optimal Blue data, the national month-over-month HPA in November was -0.9%, and it is expected to continue to decline in December and January. In all 60 largest metros, home prices appear to have peaked, regardless of seasonality. Dec. 2022 and Jan. 2023 are expected to see 5% and 3% HPA growth, respectively.