Home prices post steepest annual decline in 11 years

Somewhere, Jerome Powell is smiling.

The median home sale price declined 3.3 percent annually in March, according to the latest housing report from Redfin. The decline was the largest recorded by the brokerage since it began tracking the data in 2012, and only the second year-over-year drop — the previous one coming in February.

The decline is rooted in decisions by the Powell-led Federal Reserve, which has been raising interest rates to tame the inflation that the Fed caused, in part, by super-charging the housing market in the first place.

The median sale price last month was $400,528, down more than 3 percent from March 2022. It was a 3.6 percent increase from February, but that figure is not seasonally adjusted. Comparing sale prices from different months can be deceiving because more expensive sales are more likely at certain times of the year.

Price movement ranged throughout the country. Sale prices largely declined last month in expensive coastal enclaves and so-called pandemic boomtowns, but more affordable housing markets became more expensive.

In general, the spring selling season isn’t providing the salvation that many in the industry were hoping for, if not expecting.

“This year’s spring homebuying season is lackluster,” Redfin chief economist Daryl Fairweather said in the report. “Normally we see homebuyers come out in throngs at this time of year, which isn’t happening.”

New listings fell by 23.3 percent and pending home sales by 26.6 percent, both reaching their lowest levels since the onset of the pandemic. Bidding wars for Redfin-listed homes have leveled off at more than two in five sales in recent months after falling for most of last year — a return to normalcy after the frenzied market of 2020 and 2021.

Rising mortgage rates, engineered in part by the Federal Reserve, have a lot to do with those declines, as buyers reduce their offers to account for higher interest costs, and would-be sellers keep their homes off the market rather than give up the low-interest mortgages they locked in during the Fed’s easy-money era.

The speed of home sales accelerated from the previous month. Homes that sold in March spent a median of 43 days on the market, down from 52 for February sales. Only 28.5 percent of sale prices last month were above the final listing price, down from 54.1 percent a year earlier.

Boise recorded the largest annual drop in both prices and pending home sales, down 15.4 percent and 78.8 percent, respectively, as the pandemic migration to Idaho has ended. Other markets with double-digit decreases in home prices included Austin, Sacramento and San Jose.

El Paso and Camden were among the markets to see at least 10 percent year-over-year rises in home prices, which had not run up in those markets during 2021.