Home Prices Tick Down as Supply Fluctuates

U.S. home prices have declined slightly since they reached a high in the third quarter of 2022, but remain much higher than before the pandemic housing boom. After a period of stability in the years following the 2008 housing crash, prices exploded between 2020 and 2022.

According to the St. Louis Fed, median prices for U.S. houses rose from approximately $329,000 at the start of the coronavirus pandemic to around $443,000 in Q3 of 2022. Over the same time period, U.S. inflation hit 11.5 percent. Because housing was in such high demand, buyers outnumbered supply, causing prices to soar. With housing also promising sizable returns, it also attracts investors. They bought a record share of homes in the United States in 2021, putting further pressure on the market.

Housing demand in the U.S. used to follow a cyclical pattern, but it was upset by the pandemic. Home sales typically heated up in the summer, when houses were sold faster, and cooled down in winter. In 2020, however, a home buying frenzy ensued in spring, when the availability of housing dipped, followed by another, longer dip of supply in the fall. In 2021, the summer availability dip turned into a veritable trough lasting throughout most of the year. While house listings still peaked at the turn of the year in 2022, houses remained on the market at their supply peak about as long as they would have in a hot summer market in in 2017, '18 or '19.

According to Marketwatch, the pandemic housing market actually collided with other, longer-term developments that were already putting pressure on U.S. home supply. But in 2025 and 2026, surging mortgage interest rates, coupled with an increased supply of housing have reduced buyer competition, leading to price drops in dozens of big U.S. cities. In the first quarter of 2026, home prices dipped in 39 out of the largest 129 cities in the U.S., according to CBS. As fewer buyers can afford to compete, the number of homes on the market has slowly but surely increased. This gives buyers more leverage and forces sellers to reduce prices.