The US housing market, which experienced a remarkable surge in prices during the coronavirus pandemic, is now facing an unexpected turn of events. As the nation gradually recovers from the pandemic’s economic fallout, an unprecedented decline in home prices has emerged, marking a significant shift in the real estate landscape.
The median US home price plunged 4.1%, or $17.063, year-over-year in April to $408.031, marking the biggest-ever drop in dollar terms and the largest in percentage terms since January 2012, according to a research report published by real estate broker Redfin on May 22.
Moreover, April accounted for the third straight month of home price declines after a decade of increases.
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The historic drop comes as record-high mortgage rates weighed on homebuyer demand but also because prices neared their all-time high in April 2022. Then, the median sale price stood at $425,634, just below the peak price of $432,109 recorded a month later.
New listings down 26.1%
Meanwhile, Redfin’s research report also noted a significant decrease in the number of houses that are on sale. The data shows that new listings fell by as much as 26.1% year-over-year last month as homeowners stayed put in a bid to retain their relatively low rates.
In percentage terms, this is the largest drop in history, apart from April 2020, when the coronavirus pandemic caused a housing market crash.
“Elevated mortgage rates are preventing would-be buyers from buying and would-be sellers from selling. And because sellers aren’t selling, the buyers who are out there have very limited options.”
– said Daryl Fairweather, Chief Economist at Redfin.
On the other hand, Fairweather said that homeowners’ reluctance to sell their houses also serves as a stabilizing factor that prevents home prices from plummeting as much as during the Great Recession. In some locations, “there are so few listings that prices are actually rising as a limited pool of buyers competes for an even more limited pool of homes,” he added.
