House prices have fallen annually for the first time in 11 years, as sales plunged by more than a fifth.
The national median price of existing homes fell 0.2 percent in February from a year earlier to $363,000, marking the first year-over-year decline since February 2012, the National Association of Realtors he said on Tuesday. Median prices plunged 12.3 percent from a record $413,800 in June.
Prices rose in the Midwest and South but fell in the Northeast and West, ending a 131-month hot streak of year-over-year gains across the country, the longest on record.
The Federal Reserve’s historic push to accelerate inflation with rapid interest rate increases has battered the housing market by forcing mortgage rates higher.
Total existing home sales fell 22.6 percent year-over-year to a seasonally adjusted annual rate of 4.58 million, down from 5.92 million in February 2022.
A For Sale sign is posted in front of a house for sale on February 20, 2023 in San Francisco, California. Prices rose in the Midwest and South but fell in the Northeast and West, ending a 131-month hot streak of year-over-year gains across the country, the longest on record.
The national median price of existing homes fell 0.2 percent in February from a year earlier to $363,000, marking the first year-over-year drop since February 2012, the National Association of Realtors said Tuesday. Median prices fell 12.3% from a record $413,800 in June
This four-bedroom house in Austin, Texas was listed for sale a month ago for $3.9 million, up from $650,000 the last time it listed in 2019. The price has now been reduced at $200,000 to $3.7 million.
While the annual rate fell, home prices rose 14.5 percent last month as buyers pounced on better mortgage deals.
Sales increased in all four regions, with the Midwest, West and densely populated South posting double-digit growth.
According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.60 percent as of March 16, down from 6.73 percent the week before, but considerably higher than 4.16 percent a year ago. .
“I think home sales have already bottomed out,” said Lawrence Yun, NAR’s chief economist. “Cognizant of changes in mortgage rates, homebuyers are taking advantage of any rate decline.”
The Federal Reserve is currently meeting to decide whether to go ahead with planned rate hikes following the collapse of regional banks SVB and Signature, as well as the failure of global investment beast Credit Suisse.
His decision will have an immediate impact on mortgage rates and the housing market, which is one of the most rate-sensitive parts of the economy.
Jerome Powell is expected to announce a 25 basis point increase from 4.75 to 5 percent on Wednesday afternoon.
Two weeks ago the market was betting on a rise of 50 basis points.
Austin, Texas is one of 20 cities that has seen single-family home prices drop. The decline in existing home sales in January was nationwide, but steepest in the West, where sales fell 42.4% year-over-year.
Total existing home sales fell 22.6 percent year-over-year to a seasonally adjusted annual rate of 4.58 million, down from 5.92 million in February 2022
The median price in the West is the most expensive in the country at $525,200, down 4.6 percent from January 2022. Pictured are homes in San Francisco, one of the most expensive cities in the United States.
There were 980,000 unsold homes on the market at the end of February, up 15.3 percent from the same period last year.
At February’s sales pace, it would take 2.6 months to deplete current inventory of existing homes, up from 1.7 months last year.
A four to seven month supply is considered a healthy balance between supply and demand.
“Inventory levels are still at record lows,” Yun added. “As a result, multiple offers are coming back on a good number of properties.”
First-time buyers were responsible for 27 percent of sales in February, down from 29 percent in February 2022.
An earlier NAR report revealed that annual first-time buyer engagement was at all-time lows.
Properties typically stayed on the market for 34 days last month, up from 33 days in January.
Fifty-seven percent of the homes sold in February were on the market for less than a month.