Houses for sale (freepik photo)
The median sales price of previously owned homes in the United States fell to $363,000 in February, according to data from the National Association of Realtors released Tuesday. This is a 0.2% decrease compared to the same month a year earlier, when the median price was $363,000.
The fall snapped a streak of 131 consecutive months in which prices rose year-over-year – the longest such streak on record. The US housing market has suffered as the Federal Reserve’s rate hikes cause large volatility in long-term mortgage rates.
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“The speed of price decline is limited by the lack of existing homes coming on the market … but even the relatively small number of homes on the list are taking longer to sell,” Pantheon chief economist Ian Shepherdson said. The most significant declines occurred in the West, where median prices fell 5.6% to $541,000 last month, and in the Northeast, where median prices fell 4.5% to $366,100.
While prices fell in the month, the volume of existing home sales jumped 14.5% in February to a seasonally adjusted annual rate of 4.58 million – the first increase in 12 months. Sales were still down 22.6% compared to the same month a year ago. The jump in sales coincided with a drop in long-term mortgage interest rates last month, which fell to just over 6% in February after reaching 7% last fall.
“Aware of the change in mortgage rates, homebuyers are taking advantage of any interest rate drops,” said Lawrence Yoon, the NAR’s chief economist. “Furthermore, we are seeing stronger sales increases in areas where home prices are falling and local economies are adding jobs.”
Mortgage rates rose again this month – raising the likelihood that the increased housing activity will be short-lived. “It is likely that there will be a clear decrease in sales in March, perhaps to a new cyclical low,” Shepherdson added.
The housing market will get its next indication of the likely path of mortgage rates when the Federal Reserve announces whether it will raise interest rates on Wednesday. Investors are currently betting on a quarter of a percent despite the recent turmoil in the American banking sector. As the Post reported, some experts have suggested that mortgage rates could start to fall if the Fed slows or halts its hikes.
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