Used Car Prices Are Up Again—When Will They Drop?

By

Sep. 29 2021, Published 12:14 p.m. ET

The used car market has been vicious to buyers over the past year and a half. Following a drop in prices from 2017–2019 by -0.34 percent, issues like the COVID-19 pandemic, the semiconductor chip shortage, and inflation have sent costs skyward.

Article continues below advertisement

As of this week, most of the used car segments have increased in price. Despite a few months of price drops ending in July, the costs are going up again. When will hopeful drivers catch a break?

What the latest used car data says

According to Blackbook, used car prices are up 0.48 percent this week with compact and mid-size cars gaining more rapidly than trucks and SUVs. Last week, the overall market was up 0.38 percent.

Article continues below advertisement

The only segment that declined was sports cars. This likely has to do with the fact that sports cars are usually more popular during the summer months, and buyers tend to do their shopping in spring. Sports cars have been on the decline for 13 consecutive weeks, which is a stark contrast to the overall used car market that has been increasing for four weeks straight.

According to data from Cars.com, the median listing price for a used car increased 34.3 percent in the 12 months ending in August. At that time, used cars held a median value of $23,994. Most of that increase came between March and June when the median price rose 27.3 percent.

Article continues below advertisement

Inventory is down, too

The current retail availability for used cars is down 15 percent YTD. As trade-ins and lease returns slow down, the used car stock is falling, too. This is causing wholesale values to increase, which ripples down to consumer-facing values.

The data suggests another peak in used car prices is coming

The prices for vehicles that are 2–8 years old have fluctuated a lot since May 2020. A big price run came in May and July 2020 before falling off near pre-pandemic levels in the second half of the year.

Article continues below advertisement

In 2021, the first quarter saw another round of value hikes and surpassed the previous COVID-19 pandemic peak. After decreasing for a few months, another peak is coming.

The good news for drivers is that another downslide is bound to occur. The only question is when that will happen and how much lower costs will be.

Article continues below advertisement

When will used car prices go down again?

If you're hoping to find a used car that fits your lifestyle and budget, you aren't alone. Even Wall Street investors are worried about the market thanks to the Manheim Used Vehicle Value Index, which is an obscure index currently being tied to inflation predictions.

Ultimately, a peak is coming, but it's largely unpredictable. The chip shortage is still an ongoing crisis. Keep your finger to the pulse of the market and notice when overall market prices start to decline.

To decide how long you want to wait, consider weighing the cost of repairs, public transportation (including the time it costs you), and a car lease (or lease buyout) against one another. This will help you figure out what decision is most financially responsible for you.

Advertisement

More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.