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Houses in coronavirus-pandemic hotspots like Boise, Idaho and Austin, Texas are selling for as much as $80,000 less than they were a year ago, according to a new report.
The median U.S. home sale price fell 4.1 percent or $17,603 year over year to $408,031 between April 2022 and April 2023, according to a report released Monday from Redfin as the market buckles under the weight of 20-year high mortgage rates.
It’s the biggest annual drop ever recorded in Redfin’s records in dollar terms and the biggest drop percentage-wise recorded since January 2012, according to the report.
Prices fell not only because of high mortgage rates but because home prices hit record highs last year. The median home price in April 2022 was $425,634, just shy of the $432,109 record set the next month.
The steepest declines have been recorded in towns that saw housing prices plummet to unsustainable highs last year, with coastal California cities and pandemic boomtowns like Boise and Austin seeing the biggest dropoffs. Prices in Oakland dropped 16.1 percent or $174,500 annually, followed by Austin and Boise at 15.3 and 15.1 percent respectively.
San Francisco saw prices fall 13.4 percent or $220,000 over the past year, while Salt Lake City prices fell 10.9 percent or $60,000.
High mortgage rates are keeping sellers who are reluctant to give up their low rates on the sidelines, limiting the range of options homebuyers have. While prices are dropping, the overall shortage of homes for sale is keeping prices from slipping as much as they did during the great recession, Redfin economists explained.
“Elevated mortgage rates are preventing would-be buyers from buying and would-be sellers from selling. And because sellers aren’t selling, the buyers who are out there have very limited options,” said Redfin Chief Economist Daryl Fairweather. “Home prices are faltering due to sluggish homebuyer demand, but the shortage of homes for sale is preventing them from falling as much as they did in the Great Recession.
“In some places, there are so few listings that prices are actually rising as a limited pool of buyers competes for an even more limited pool of homes.”
Pending home sales fell 21 percent year over year during April, an improvement from the record 36.1 percent decline during the Fall. Pending sales rose 3.1% from March, the first month-over-month increase since December and the largest increase since September 2021, according to Redfin.