Home Prices Just Fell For The First Time In 11 Years

“Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines,” says NAR’s chief economist.

For the first time since February 2012, the median price of homes sold in the U.S. actually went down. According to the National Association of Realtors (NAR)’s monthly report, February’s $363,000 number is only a 0.2% from a year ago but breaks an upward streak of 11 years or 131 consecutive months.

This all comes at a shaky moment in the housing market’s history. As years of rising prices may be start to see much-anticipated market correction, the number of previously-owned homes rose 14.5% between January and February but, at 4.58 million units, is still down 22.5% from 2022.

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“Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines,” NAR Chief Economist Lawrence Yun said in a statement. “Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs.”

Here’s Why Existing Home Sales Soared Last Month

While different regions of the U.S. usually see fluctuating numbers, all posted gains from January to February and year-over-year declines — the biggest drop was in the West at 28.3%.

A key reason for such declines have to with the fact that many home buyers are feeling pushed out by high mortgage rates and unaffordable prices. When rates dropped sharply at the end of December, many moved to buy quickly and closed by February.  

Even though inventory is up 15.3% at 980,000 total units, unsold homes are still at just a 2.6-month supply and down 10.3% from the previous month.

While homes are not flying off the shelves as fast (the average one was up for 34 days in February compared to 18 at the same time in 2022), there are still multiple buyers for homes in many popular locations.

“Inventory levels are still at historic lows," Yun said. "Consequently, multiple offers are returning on a good number of properties.”

Another sign of low affordability is that the number of first-time buyers has dropped to 27% while all-cash sales rose to 28% from 25% year-over-year.

A Regional Breakdown Of Where Home Prices Are Falling And Rising

Regionally, a median home sold for $366,100 in the Northeast. This is a 4.6% drop from February 2022 while, in the West the $541,100 number is a 5.6% drop in the same time period.

The South and Midwest are two regions where prices continued to rise. In the latter, the median price of $261,200 is a 5% increase while the $342,000 see in the South is 2.7% more than a year ago — both regions have been seeing an influx of new residents with out-of-town salaries search for cheaper real estate.

But while the West saw the biggest drop from 2022, it also rebounded quickly between January and February — in the latter month, existing sales rose by 19.4%

Annual sales, however, were still down in all four regions as affordability wavered. According to NAR, sales of existing single-family homes are also up significantly while condo sales are falling.

At a seasonally adjusted rate of 4.14 million, sales of single-family properties are up 15.3% from 3.59 million in January but down 21.4% from 2022. Condos, meanwhile, are down 32.3% from February 2022 with 440,000 sold units.

The median price of a condo also dropped 2.5% to $321,000.