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Home prices are coming down drastically, but that does not mean that buying a home is getting easier.
The median sale price of a home in the United States was $400,528 in March new data From real estate brokerage Redfin. That’s a 3.3% drop from the same month a year ago – and the biggest year-on-year decline since 2012.
In February, homes were 1.2% cheaper than a year earlier.
what the experts are saying
Redfin experts attribute the drop in prices to a sharp drop in buyers. It’s no wonder, given the recent path mortgage rates have taken.
Rates begin rising in 2022 after hovering at a historic low for two years. They have been declining slowly after rising above 7% last November, most recently peaking at 6.27% last week, but they are still doubling in 2020. Higher rates mean higher monthly payments, and that means potential buyers are opting to sit out. On the sidelines until rates come down.
“Normally we see a homebuyer rush this time of year, which isn’t happening,” Daryl Fairweather, chief economist at Redfin, said in a blog post.
She noted that there are some signs of a general spring pick-up in the housing market (including homes that are selling faster than they did this winter), which can be attributed to the large decline in new listings.
ground level
Rising borrowing costs affect both sides of the housing market. Higher rates may deter potential sellers from listing their properties, as sellers who have lower rates on their mortgages are unlikely to secure a new loan at a comparable rate.
In fact, in a recent Realtor.com survey, more than three-quarters of home sellers said they felt “locked in” in their current home because of low mortgage rates. Nearly half said they plan to wait until rates drop before selling.
Fewer sellers means less inventory. Combine this with fewer buyers searching, and you have a recipe for a tough spring housing market for both buyers and sellers — even if prices are (finally) falling.
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