Home Prices Drop in Many States

Home prices in the United States experienced their most significant decline in over a decade during the first quarter of this year, according to the National Association of Realtors (NAR). This news comes after a period of booming housing prices across the country. While some regions continue to see prices rise, others are experiencing a notable downturn.

The areas with declining home prices are primarily located in California and the Mountain West. San Francisco and San Jose saw median prices dropped by 14.5% and 13.7% respectively, compared to the previous year. Even pandemic boomtowns like Austin, Texas, and Boise, Idaho, experienced price declines of over 10%.
Several factors contribute to this trend, including a decrease in home sales nationwide due to higher mortgage rates and limited supply. As a result, the number of metro areas experiencing annual price declines rose to 31%, the highest percentage in 11 years.
Lawrence Yun, NAR’s chief economist, explains that typically, expensive markets witness lower home prices, while more affordable markets see higher prices.

Due to the current shortage of housing inventory, any price declines may only be temporary. The areas where home prices are falling the fastest are those that were already expensive or experienced significant price increases during the pandemic-induced housing boom. Conversely, in other parts of the country, limited inventory continues to drive prices higher.
Nationally, the median price of existing single-family homes fell by 0.2% in the first quarter compared to the previous year, amounting to $371,200. This marks the first year-over-year decline in prices since the first quarter of 2012.

According to NAR, there was a deceleration in the number of metro areas experiencing double-digit-percentage growth, with only 7% seeing median prices rise by over 10% compared to the previous year. In the fourth quarter, that figure stood at 18% of metro areas.
Additionally, NAR reported that the typical monthly mortgage payment for a single-family home increased by 33% in the first quarter compared to the previous year, reaching $1,859.

The Kingsport, Tennessee, metro area saw the strongest median-price increase in the first quarter, up 18.9% from the previous year, followed by Oshkosh, Wisconsin, with a 16.5% increase, and Warner Robins, Georgia, with a 16.2% increase.

While the housing market experiences some fluctuations, it remains a competitive and dynamic landscape. Buyers and sellers alike must navigate these changing conditions to make informed decisions in their pursuit of the perfect home.