The median U.S. home price fell 3.3% in March to $400,528, the largest year-over-year drop since 2012, according to a new report from Redfin.
Pandemic boomtowns and pricey Bay Area markets led the price declines in March. In Boise, Idaho, prices fell 15.4% from a year earlier, more than any other U.S. metro area Redfin analyzed. Next came Austin, Texas (-13.7%), Sacramento, Calif. (-11.9%), San Jose (-10.5%) and Oakland (-9.7%).
Boise also saw the largest drop in pending home sales, with a 78.8% year-over-year decline.
Nationwide, pending sales fell 26.6% on a seasonally-adjusted basis to the lowest level since the onset of the pandemic (April 2020).
Pandemic boomtowns and expensive coastal markets are seeing their housing markets slow quickly because home prices overheated in recent years and are now coming back down to earth after many buyers were priced out. Prices in Boise, for example, surged a record 40.9% in May 2021 as low mortgage rates, remote work and relatively affordable housing brought in scores of homebuyers from more expensive parts of the country. That compares with a national record increase of 26% the same month. Redfin’s records date back to 2012.
Markets that didn’t heat up as much in recent years are holding up relatively well. Pending sales fell the least in Fort Worth/Dallas, Indianapolis, Cincinnati and Buffalo, N.Y. And prices rose more than 10% year over year in March in Milwaukee, El Paso, Omaha, Camden, N.J., and Knoxville, Tenn. – the biggest gainers in the country.
New listings fell 23.3% year over year in March to the lowest level on record, aside from the start of the pandemic, on a seasonally-adjusted basis. Many homeowners are hesitant to sell because moving would mean taking on a higher mortgage rate when they buy their next home. The average 30-year-fixed mortgage rate was 6.54% in March, up from 4.17% a year earlier. Others are staying put because they already bought their dream home in recent years or fear they won’t be able to find another home they like given the shortage of listings.
A lack of homes on the market is also contributing to the decline in sales, preventing home prices from falling further and leading to bidding wars in some markets. More than two of every five (44.3%) home offers written by Redfin agents faced competition in March. The bidding-war rate has hovered around that level for the past five months following nearly a year of month-over-month declines.
Roughly 55,000 home-purchase agreements were canceled in March, equal to 14.8% of homes that went under contract. That’s down from the 2022 peak of 16.8% in October but up from 11.2% a year earlier.
To view the full report, click here.
Photo by Julien Maculan on Unsplash