US Home Prices Decline Year-Over-Year for the First Time Since February 2012

Redfin is reporting that US home-sale prices have declined year-over-year for the first time in more than a decade. The milestone comes as 7% mortgage rates have sidelined buyers, and sellers are being forced to lower their asking prices to accommodate buyers and the higher interest rates. The typical US house sold for $350,246 during the four weeks ending February 26th, down 0.6% from a year ago, marking the first time prices have declined since February 2012.

However, Redfin cautions that the decline does not mean houses are more affordable. The typical monthly mortgage payment for today’s homebuyer is a record-high $2,520, due in part to elevated mortgage rates. That could lead to a prolonged winter lull for the housing market, Redfin said.

Adding additional insight to the report, Redfin’s Deputy Chief Economist Taylor Marr said:

“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. 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% range was the straw that broke the camel’s back, dampening homebuying demand and leading to sellers asking less for their home.

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. 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.”