US home prices post first annual decline since 2012

The US housing market posted its first annual decline in home prices since 2012 as a result of higher mortgage rates.

This is according to the new report from real estate brokerage firm Redfin, which showed that the median home sale price in the US fell 1.2% in February from a year earlier.

“Buyers are struggling because higher interest rates have increased the cost of homeownership, and sellers are struggling because they are still adjusting to the fact that their home will not sell for the same price as their neighbor a year ago,” Andrew said. Vallejo, Redfin Real Estate Agent in Austin, Texas. “Falling prices are distracting more house hunters, but they’re taking their time because the stakes are high and they have the edge.”

US HOUSING MARKET COST $2.3 TRILLION, BIGGEST SINCE 2008

During COVID-19 pandemichousing prices soared at a rate not seen since the 1970s, and mortgage rates approached record lows. Homebuyers full of stimulus money and hungry for more space during the pandemic have flocked to the suburbs.

Demand was so high, and stocks so low, that at the height of the market, some buyers refused to inspect and evaluate houses or paid hundreds of thousands more than the asking price.

The madness stopped when Federal Reserve launched the most aggressive campaign to raise interest rates since the 1980s in an attempt to slow the economy and quell runaway inflation.

NEW HOME SALES GROW IN JANUARY MORE THAN EXPECTED TO 10-MONTH HIGH

The interest-sensitive housing market has so far suffered from monetary tightening: although mortgage rates fell from a peak of 7.08% in November, they recently reversed this trend and began to rise amid fears of an increase interest rates. . The average rate on 30-year fixed mortgages fell to 6.6% this week amid wider volatility in the financial sector. according to from mortgage lender Freddie Mac. This remains significantly higher than just a year ago, when rates hovered around 4.16%.

Demand from homebuyers dried up as consumers faced the highest mortgage rates in years, pushing home prices even further. According to Redfin, the median price of a home sold in February was $386,721, down 10.5% from its peak of $433,133 in May.

However, Redfin economists noted that “the housing market turned around in March” following the staggering collapse of Silicon Valley Bank. Continued turmoil in the banking sector has reduced the likelihood of a sharper rate peak this year, which could lead to lower mortgage rates, they said.

Some economists expect an even sharper decline in house prices in the coming months.

Dallas Fed Economists wrote in analysis published last month that there are risks of a more severe downturn in the housing market. They predicted that prices could fall by 20%. highest mortgage rates in two decades, they threaten to provoke a “deep global collapse of the housing market.”

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