Home Prices Fell Year-Over-Year For The First Time In A Decade, But There’s A Massive Catch

Median home The prices dropped year-over-year, for the first time since February 2012. However, they were higher. mortgage rates Properties are still less affordable for potential buyers.

According to the February 2023 report, the average home sold in the United States for $350,200. This represents a 0.6% decrease from the same month last years. data Redfin real estate brokerage released this information on Thursday. However, the average monthly mortgage payment has surpassed $2,500 due to rising interest rates. economy.

“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,” Taylor Marr, Redfin’s Deputy Chief Economist, commented. “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.”

According to the Mortgage Rates Database, rates for a 30-year fixed mortgage were at 6.7% in March 2023, compared to 7.1% in November 2022. data Freddie Mac is a government-backed lender. While mortgage rates remained below 3 percent during the lockdown-induced depression, they started to rise after the Federal Reserve increased the target federal funds rate in an effort to reduce inflationary pressures.

According to the Median Home Sale Prices report, they have risen from $322,000.00 in the second quarter 2020 to $467,000.00 in the fourth quarter 2022. data The Department of Housing and Urban Development. The second half of the last year saw costs plateau as mortgage rates increased.

The low-rate mortgages homeowners have acquired over the years may be hesitant to sell their property. This can limit the supply of homes on the market and make it less affordable for buyers. Redfin stated that mortgage applications have fallen to their lowest levels for three decades.

“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.”

According to a 2019 report, the housing market was experiencing a shortage of 3.8 millions houses. data Fannie Mae, a government-backed mortgage company. The National Association of Realtors estimates Homebuilders would have to have built between 5.8 and 6.8million more houses in the past 20 years to meet current demand.

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The phenomenon was brought to the attention of senators from the Senate Banking Committee during their first meeting. hearing Last month, the new Congress called for federal action to remove obstacles that prevent home construction. “There just isn’t enough quality housing at prices that people can afford,” Senator Sherrod Brown (D.OH) stated in his opening statement. “And because there aren’t enough homes, renters, and homeowners are stuck paying more every month or living with peeling lead paint or leaks.”

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