U.S. home prices dropped for the first time in 11 years
For the first time in 11 years, the median sale prices of U.S. homes fell in February, giving buyers with high borrowing costs some comfort.
Here’s what we know.
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What happened? The Wall Street Journal reported an increase in the sales of “previously owned homes, which make up most of the housing market, rose 14.5% in February from the prior month, but were down 22.6% from a year earlier.”
The median price for existing homes in February 2022 ($363,700) declined 0.2% to $363,000 this year, according to Bloomberg.
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Why did it happen? Chief economist at Pantheon Macroeconomics, Ian Shepherdson, said, according to the New York Post, “The speed of decline in prices is being limited by the lack of existing homes coming to market ... but even the relatively low number of homes listed are taking longer to sell.”
A new report from Redfin, a real estate brokerage firm, detailed that home sellers were responding to the amount of homebuyers dropping due to high mortgage costs.
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What does this mean? “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,” Redfin real estate agent Andrew Vallejo, said.
Fox Business reported that the drop in prices is bringing in more people looking for homes.
“This is not the bottom for prices,” chief economist for NAR, Lawrence Yun, told CNN. “We expect a continuing price correction, but we are not expecting prices to crash.”
Christopher Rupkey, chief economist at FWDBONDS in New York, told Reuters, “It’s too early to declare the home sales recession over, but the decline in mortgage rates allowed buyers to dip their toes back in the market as did the cheaper prices.”
