According to research, used-car prices may be decreasing.

• Over the pandemic, the price of used cars has increased by at least 50%.
• As of Jan. 30, those amounts showed signs of softening.
• The average cost for cars that are 1 to 3 years old is $41,121.

Used-car prices may be starting to soften, research suggests.

In the last three weeks of January, the used-car market experienced a slight decrease in prices, with a 50% increase in demand, according to CoPilot, an app that monitors daily prices at dealerships nationwide.

In late 2021, prices for all age groups and segments hit record highs, but have since begun to decrease or stabilize, potentially indicating relief for consumers in the car-buying market, according to Pat Ryan, CEO of CoPilot.

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The average cost of cars that are 1 to 3 years old has decreased by 2.1% from $42,000 in early January to $41,121, according to CoPilot. Specifically, the price of 2019 models has fallen by 2.5%, while 2020 vehicles have experienced a larger decrease of 4.4%.

CoPilot reported that dealer inventories for 2019 cars increased by 15%, while inventories for 2020 models rose by 22%.

According to Ryan, due to the increasing pressures on 2019 and 2020 models, it is likely that these vehicles will be at the forefront on the journey towards recovery.

The shortage of computer chips in the auto industry has led to a decline in new car inventory, which has spilled over into the used-car market. According to CoPilot data, the average transaction price of a new car remains at $46,832, which is relatively stable from early January.

Despite the recent decline in the used-car market, the average price for 1- to 3-year-old cars remains high. According to CoPilot, the average price of $41,121 as of Jan. 30 is a 50% increase from the pre-pandemic price of $27,301 in January 2020.

The average cost of used cars aged 4 to 7 years has increased by nearly 50% from $20,757 to $31,046 since the pandemic.

According to a joint estimate from J.D. Power and LMC Automotive, the average trade-in value for used cars increased by 88% in January, reaching $9,852, which is a $4,611 increase from the same month last year.

The number of consumers who are waiting to buy cars is predicted to be between 4.5 million and 5 million this year, due to continued high demand.

J.D. Power's head of data and analytics, Tyson Jominy, predicted in January that the pent-up demand will keep inventories low and prices high throughout most of 2022.