IMPORTANT POINTS:
- This drop marked a decrease of 4.1% compared to the previous year.
- It also marks the third consecutive month of decline in the real estate market, after a decade of rising prices.
- A significant decrease was observed in the number of homes for sale, with a 26.1% decrease in new listings.
The US housing market, which saw prices surge during the coronavirus pandemic, is now facing an unexpected turn. As the nation gradually recovers from the economic fallout of the pandemic, an unprecedented drop in home prices has emerged, marking a significant shift in the real estate landscape.
According to a report released May 22 by real estate broker Redfin, the median home price in the United States fell 4.1%, or $17,063, compared to a year earlier, to $408,031. This is the largest drop in monetary terms and the largest in percentage terms since January 2012.
April marked the third consecutive month of decline in home prices after a decade of increases
The drop was caused by record mortgage rates, which have hurt homebuyer demand, as well as prices nearing their all-time high in April 2022. At the time, the median sales price stood at $425,634. USD, just below the maximum price of USD 432.109 registered a month later.
Meanwhile, the Redfin report also highlighted a significant decline in the number of homes for sale. The data shows that new listings last month fell as much as 26.1% compared to the previous year, as homeowners decided to stay in their homes to keep their rates relatively low.
In percentage terms, this is the biggest drop in history, next to that of April 2020, when the coronavirus pandemic caused a collapse in the real estate market.
“Since mortgage rates are high, potential buyers can’t buy and potential sellers can’t sell. And because sellers aren’t selling, buyers who are in the market have very limited options.”Daryl Fairweather, chief economist at Redfin.
On the other hand, Fairweather noted that homeowners’ reluctance to sell also acts as a stabilizing factor that prevents home prices from falling as much as they did during the Great Recession. In some locations, “there are so few properties on the market that prices are rising as a limited pool of buyers competes for an even more limited number of homes,” he added.
