Median U.S. Home Price Declines Annually for the First Time in a Decade

Home prices in Austin, Texas, are falling. Getty Images

For the first time in a decade, U.S. home prices have dropped annually, according to a report Friday from Redfin.

With buyers shunning the market due to inflated mortgage rates and sellers having to adjust their expectations as a result, February saw the median property price nationwide fall 1.2% compared to the same time last year, the first year-over-year decline since 2012, the online property portal said.

The typical home price now stands at $386,721.

“Buyers are struggling because higher interest rates have increased the cost of homeownership, and sellers are struggling because they’re still adjusting to the fact that their home won’t sell for what their neighbor’s did a year ago,” Andrew Vallejo, a Redfin real estate agent in Austin, Texas, said in the report.

“The drop in prices is bringing more house hunters off the sidelines, but they’re in no rush because rates are high and they have the upper hand,” he said.

During the peak of the pandemic, Austin’s property market was hotter than hot. Buyers flocked to the city from across the country, wooed by its lifestyle,  comparatively good value and favorable tax environment.

But now, the city has seen one of the largest home-price declines in the country, dropping 12.4% in February from a year earlier, according to Redfin.

Only San Jose, in California’s Silicon Valley tech hub, saw greater declines, with median sale prices falling 13.1%. Oakland, Sacramento and Oxnard, all in California, rounded out the top five fastest-falling markets.

On the flip side, prices were up most significantly in Omaha, Nebraska, where they rose 11.8% annually; in Knoxville, Tennessee, values jumped 11.5%; and homes appreciated 11.4% in Florida’s West Palm Beach.

Redfin pointed out that the housing market is shifting further this month, in the wake of the collapse of Silicon Valley Bank.

The banking sector turmoil “lowered the likelihood of the Federal Reserve hiking interest rates much more this year,” the report said, which in turn “caused mortgage rates to drop, which brought more home buyers back to the market.”