The drop comes as mortgage rates ticked up to 7.1% this week
U.S. home prices dropped 0.6% year over year last month, the first time sales prices have seen an annual dip in a decade, according to a report Thursday from Redfin. UNSPLASH
Median home prices in the U.S. dropped 0.6% year over year last month, the first time sales prices have seen an annual dip in a decade, according to a report Thursday from Redfin.
Meanwhile, average mortgage rates hit 7.1% this week, sending even more buyers to the sidelines, the report said. In addition, sellers are having to lower their asking prices to accommodate the higher borrowing costs buyers are facing.
The typical U.S. home sold for $350,246 during the four weeks ending Feb. 26, the report said. Despite the drop in prices, higher rates have pushed the average monthly mortgage payment $2,520, a record high that could keep both buyers and sellers from the market.
“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,” Taylor Marr, Redfin’s deputy chief economist, said in the report. “But it’s not surprising and in many ways, it’s welcome.”
Home prices shot up so much during the pandemic—and what goes up, must come down. Especially since rates are decidedly on an upward trajectory.
“Mortgage rates rising to the 7% range was the straw that broke the camel’s back, dampening home-buying demand and leading to sellers asking less for their home,” Mr. Marr said. “Prices will probably decline a bit more in the coming months.”
Sellers are also showing more caution. New listings fell 20.3% year over year in the four-week period, the biggest decline in three months. New listings declined in all 50 of the most populous U.S. metros, with Oakland, California, logging the biggest drop, 45.1% annually. Sacramento, California, and Seattle followed, with drops of 42.6% and 42%, respectively.