Home prices are falling annually for the first time in 11 years as sales fall by more than a fifth amid brutal mortgage rates as the Fed suppresses inflation.
- The median existing home price fell 0.2 percent in February from a year earlier to $363,000, marking the first annual decline since February 2012.
- Prices rose in the Midwest and South, but fell in the Northeast and West, ending a hot streak of increases that lasted 131 months nationwide year-over-year — the longest on record.
- The Fed’s historic drive to stifle inflation with rapid interest rate increases has hit the housing market by forcing mortgage rates higher.
Home prices fell annually for the first time in eleven years as sales fell 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 annual decline since February 2012, National Association of Realtors He said Tuesday. Average prices fell 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 hot streak of increases that lasted 131 months nationwide year-over-year — the longest on record.
The Fed’s historic drive to stifle inflation with rapid interest rate increases has hit 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 hangs in front of a home for sale on February 20, 2023 in San Francisco, California. Prices rose in the Midwest and South but eased in the Northeast and West, ending a hot streak of 131 months of nationwide increases year-over-year — the longest on record.
The National Association of Realtors said Tuesday that the national median price for 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. Median prices fell 12.3 percent from A record high of $413,800 in June
And 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 populous Midwest, West, and South recording double-digit growth.
According to Freddie Mac, the average 30-year fixed-rate mortgage was 6.60 percent as of March 16 — down from 6.73 percent in the previous week but up significantly from 4.16 percent a year ago.
“I think home sales have really fallen,” said Lawrence Yoon, chief economist at NAR. “Aware of changing mortgage rates, homebuyers take advantage of any drop in real estate prices.”
The Fed is currently meeting to decide whether to proceed with a planned interest rate hike after the collapse of regional banks SVB and Signature, as well as the failure of the global investment monster, Credit Suisse.
Her decision will have an immediate impact on mortgage rates and the housing market, which is one of the most rate-sensitive segments of the economy.
Jerome Powell is expected to announce an increase of 25 basis points from 4.75% to 5% on Wednesday afternoon.
Two weeks ago, the market was betting on an increase of 50 basis points.
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.
There were 980,000 unsold homes on the market at the end of February, up 15.3 percent from the same period last year.
And at the pace of February sales, it would take 2.6 months to deplete the current inventory of existing homes, up from 1.7 months a year ago.
The four to seven month supply is seen as a healthy balance between supply and demand.
“Inventory levels are still at historic lows,” Yoon added. “So, many of the offers are back on a good number of properties.”
First-time buyers were responsible for 27 percent of sales in February, down slightly from 29 percent in February 2022.
An earlier report from the NAR revealed that the annual share of first-time buyers was at an all-time low.
Properties typically stayed on the market for 34 days last month, up from 33 days in January.
57 percent of homes sold in February had been on the market for less than a month.
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