Existing home prices dropped from February 2022 to last month, marking the first such decline after about 11 years of increases.
The median existing-home price for all housing types was $363,000, the National Association of Realtors reported, a decline of 0.2% from February 2022. The 131-month streak in housing price growth that was broken is the longest on record.
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The drop comes as the Federal Reserve’s interest rate hikes have driven up mortgage rates and caused demand to fall off and home sellers to lower prices.
Existing-home sales rose in February, after months of declines, by 14.5% to a seasonally adjusted annual rate of 4.58 million. Total housing inventory at the end of February was 980,000 units, up 15.3% from a year ago. Mortgage rate declines were likely behind the pop last month.
“Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines. Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs,” NAR Chief Economist Lawrence Yun said.
“Inventory levels are still at historic lows. Consequently, multiple offers are returning on a good number of properties,” he said.
Additionally, homes typically remained on the market for 34 days in February, an increase from 33 days in January and 18 days in February 2022 — indications of a sputtering housing market.
The Tuesday report was preceded by a housing report by Redfin last week that also showed the first annual decline that that group has tracked since 2012.
After surging above 7%, mortgage rates are now at 6.6% for a 30-year fixed-rate mortgage, according to Freddie Mac. Following SVB’s collapse, that marks a 0.13-percentage-point decline from the week before.
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Some economists expect bigger declines in home prices this year as some overheated housing markets post big drops.
Goldman Sachs researchers earlier this year predicted that housing prices in Austin, Texas, would fall by more than 15% this year alone. Likewise, Phoenix, Denver, and Seattle will see home prices dropping more than 10% this year and falling in 2024, as will the California cities of San Diego and San Francisco, according to the report.
