The typical U.S. home sold for $350,246 during the four weeks ending February 26, down 0.6 percent year-over-year. According to Redfin, this marks the first time prices have dropped since February 2012.
“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. But it’s not surprising and in many ways, it’s welcome,” said Redfin Deputy Chief Economist Taylor Marr. “Home prices skyrocketed so much over the last few years that they were likely to come down once rates rose from historic lows. Mortgage rates rising to the 7 perent range was the straw that broke the camel’s back, dampening homebuying demand and leading to sellers asking less for their home.”
But that doesn’t mean homes are more affordable. The typical monthly mortgage payment for today’s homebuyer is at a record high of $2,520, due to elevated mortgage rates. That could lead to a prolonged winter for the housing market as some may wait at least until the summer, when rates may dip, to jump into the market.
“Prices will probably decline a bit more in the coming months, but first-time buyers hoping to score a major deal this year are likely out of luck,” Marr continued. “That’s because so few homeowners are listing their homes for sale. Limited inventory and continued interest in turnkey homes in desirable neighborhoods will keep prices somewhat propped up–and high rates will continue to be a hit on affordability.”