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March 3, 2023 | 12:13 PM
US house prices fell for the first time in more than a decade year-on-year in February as a surge in mortgage rates weighed on the market.
The average U.S. home sold for $350,246 in the four weeks ending Feb. 26, according to an analysis by . Real estate company Redfin this week. Selling prices fell by 0.6% compared to the same month one year ago. This is the first annual decline since February 2012.
“The year-to-year decline in prices is a milestone since the housing market recovered from the 2008 subprime mortgage crisis,” Taylor Ma, deputy chief economist at Redfin, said in a statement. .
“With housing prices skyrocketing over the past few years, it is likely that interest rates will fall if they rise from historically low levels,” Ma added.
Mortgage rates have surged again in recent weeks as worse-than-expected inflation reports sparked fears that the Federal Reserve will continue to raise rates. Average 30-year mortgage rates rose steadily throughout February, reaching a whopping 7.1% as of this week.
Rising interest rates have exacerbated the affordability crisis, pushing many homebuyers to the sidelines. At the same time, sellers are forced to lower their asking prices or delay their plans altogether.
“Rising mortgage rates to the 7% range is the straw that broke the camel’s back, weakening demand for home purchases and leading to less demand from sellers for homes,” Marr added. I was.
The biggest price drops have been in “pandemic homebuying hotspots,” the company said.
Austin, Texas recorded the biggest year-over-year decline of 11%.
First-time homebuyers are unlikely to feel relieved, even though prices are falling, Ma said.
“This is because very few homeowners are putting their homes up for sale. Limited inventory and continued interest in turnkey homes in desirable neighborhoods have supported prices somewhat, and high interest rates remain affordable. It will affect the price.”
House prices have already fallen sharply on a monthly basis since the middle of last year.
Most experts agree that the US housing market is in the midst of a correction, but the extent of the expected price decline is debatable.
In a report earlier this week, Dallas Fed researchers warned that a sharp contraction in the US housing market could plunge home prices by nearly 20%.
Last year, Redfin predicted that US home prices would fall 4% in 2023 as mortgage rates cooled the market.
Another firm, Pantheon Macroeconomics, is forecasting a sharp decline of up to 20%.
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