Home Prices Throughout the US Post Sharpest Annual Decline in 11 Years

 By:  Ilana Siyance

New reports based on April sales show that the housing market throughout the country is suffering, even despite low inventory of homes.

As reported by the Associated Press, the median sale price for homes throughout the US, had their steepest annual drop in 11 years. The national median home price fell 1.7 price compared to April of last year, reaching $388,800, the National Association of Realtors said Thursday. The year-over-year decline is the biggest since January 2012, which was at the tail-end of housing bubble burst.  The NAR also said, home sales dropped 23.2% compared with last April. The annual decline was most exaggerated in the Western part of the country, where in some regions sales tumbled over 30% compared to the previous year. For the month of April alone, existing home sales fell 3.4% compared to March, to a seasonally adjusted annual rate of 4.28 million, per the NAR. Existing home sales are down roughly 33% from their most recent peak in January 2022, the NAR added.

The dismal news in home sales comes even as home inventory remains low, with homeowners backing away from listing their homes for fear of higher borrowing costs now if they enter a new contract.  “We have a very strange dynamic,” said Lawrence Yun, the NAR’s chief economist. “Sales are down, even prices are down, yet multiple offers are happening on at least one-third of the properties (that) have been sold above their list price.”  Per the NY Post, despite the drop in sales and prices, the shortage of homes available on the market has led to competition and even bidding wars for homes in some places, especially for affordable homes, which are in even lower supply.  All in all, there were 1.04 million homes on the market by the end of April, which is a 2.9-month supply at the current sales pace.  The number of homes listed is up 7.2% from the previous month and up 1% from April last year, per the NAR. In comparison, before the pandemic hit, in April 2019 there were 1.8 million homes available on the market.

Over a year ago, the average rates on a 30-year mortgage were close to record lows.  Since then, however, the mortgage rates have been rising due to fear of inflation, and the rates had doubled to 7 percent by the end of October.  The average rate came back down since the peak in mid-November, but increased again in early March again reaching 6.7 percent.  That increase is what likely hurt sales in April.  Higher mortgage rates easily translate into hundreds of dollars a month more in costs for homebuyers getting a loan.  The already high home prices didn’t help, and this ended up putting a damper on what’s typically known as the spring homebuying season.  “Right now, home sales are just bouncing a little higher or a little lower, depending upon the movement of the mortgage rates,” said Yun.