It finally happened. Median home sale prices are lower than they were a year ago for the first time since 2012, according to new data from Redfin out Thursday.
Why it matters: High mortgage rates have been clobbering the real estate market but prices haven't budged much, as homeowners are reluctant to sell and give up the low rates they nabbed in an earlier era.
Driving the news: The rate on the 30-year mortgage rose to 6.65%, per Freddie Mac's weekly report on Thursday, while another daily measure topped 7%.
- High rates are turning buyers off. Mortgage applications are at a 28-year low, the Mortgage Bankers Association reported this week.
"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," said Redfin's deputy chief economist, Taylor Marr, in a statement.
Details: The typical home sold for $350,246 during the four weeks ending Feb. 26, or 0.6% lower than in February 2022.
The biggest price drops are in Austin (-11%), followed by San Jose, California (-10.9%), Oakland (-10.4%), Sacramento (-7.7%), and Phoenix (-7.3%).
- Yes, but: Even though prices fell, homes aren't getting more affordable for those who need to borrow. First-time buyers are facing "the least affordable market on record," per data from the National Association of Realtors, cited by Bloomberg.
- The typical monthly mortgage payment is now at a record high of $2,520, per Redfin.
The bottom line: Home prices have been soaring for the past few years — putting homeownership out of reach for many Americans. And with rates this high, it's going to take some bigger home price drops to lure more first-time buyers into the market.
