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National home prices posted their first annual decline in over a decade in February, according to new data, according to data released Thursday by Redfin.
The median United States home sale price declined 0.6 percent between February 2022 and 2023, clocking in at $350,426, data released Thursday shows.
The price decline, however, offers little relief for homebuyers today, as mortgage rates continue to hover near 7 percent and the typical monthly mortgage payment for today’s homebuyer stands at a record high of $2,520.
The week ending March 2 saw the average for 30-year fixed mortgage rates rise to 6.65 percent, marking the fourth-straight week of increases. The daily average on March 2 was 7.1 percent, according to Redfin data.
“Prices falling from a year ago is a milestone because it hasn’t happened since the housing market was recovering from the 2008 subprime mortgage crisis,” Redfin Deputy Chief Economist Taylor Marr said in a statement. “But it’s not surprising and in many ways, it’s welcome. Home prices skyrocketed so much over the last few years that they were likely to come down once rates rose from historic lows. Mortgage rates rising to the 7 percent range was the straw that broke the camel’s back, dampening homebuying demand and leading to sellers asking less for their home.”
Redfin economists predicted that the rise in mortgage rates seen during February could lead to a prolonged winter for the housing market. Rates dipped to kick off the year, leading to a brief period of increased activity which led some to predict an early spring, before climbing upwards again.
“Prices will probably decline a bit more in the coming months, but first-time buyers hoping to score a major deal this year are likely out of luck,” Marr said. “That’s because so few homeowners are listing their homes for sale. Limited inventory and continued interest in turnkey homes in desirable neighborhoods will keep prices somewhat propped up–and high rates will continue to be a hit on affordability.”
The rise in mortgage rates brought the red-hot pandemic housing market of 2020, 2021 and the first half of 2022 to a near halt, slowing home sales dramatically and edging many would-be homebuyers out of the market due to affordability concerns. Some housing market experts, such as a panel surveyed by Zillow, have predicted that the first quarter of 2023 will represent a high point for mortgage rates, and that they will gradually decrease throughout the year until they remain steady around 6 percent, and that home prices will climb steadily in response.
Home prices dropped annually in 24 of the 50 most populated United States cities, with the steepest drop-offs in popular pandemic relocation destinations such as Austin where prices dropped 11 percent, San Jose where they dipped 10.9 percent and Oakland where they fell 10.4 percent.
