After months of thinning gains, home prices have finally fallen from levels a year ago, according to a frequent data gauge. This could be a sign of what is to come as the full monthly indicators, which show price growth over the previous year, catch up.
Last month, investors were given a list of December and January home price data to digest. The figures, from the National Association of Realtors and the S&P Dow Jones indices, show prices continued to fall month-on-month, but remained positive from levels a year ago.
Economists typically measure prices against year-ago levels to deal with seasonality in the housing market – and this new batch of data reflects a continued slowdown in gains as rising mortgage rates dampened the previous pandemic real estate boom.
The Association of Realtors said the median single-family home sold for $363,100 in January, up 0.7% from a year earlier, while December house price index data S&P CoreLogic Case-Shiller homes, which track single-family home prices as an index, reflected a national price gain of 5.8% year-over-year.
More frequent data shows that the housing market may have reached a turning point in February, with weak price gains turning into declines.
(ticker: RDFN) said on Thursday his measure of the median sale price of a house fell 0.6% from levels a year ago over a four-week period that included much of February through January. From February 30 to 26. Data for the previous four-week period, Jan. 23 to Feb. 19, was revised down 0.3%.
Such a drop could be a sign of a significant change in the housing market: Over the past decade, monthly house prices have risen from levels a year ago, according to data recorded by the Realtors Association and Case-Shiller Indexes.
Investors will see in March whether the decline detected by
the weekly report is carried over into full month data releases. If the drop showed up in realtor data, it would be the first year-over-year decline since the same month in 2012. The last time Case-Shiller data showed a drop of year on year, it was two months later, in April 2012. .
For housing market forecasters, it’s less about whether declines show up in broader data, but when and for how long.
expects its index measuring changes in house prices to fall below year-ago levels in the second quarter of 2023, a recession that is expected to last until the end of 2024, according to its most recent forecast.
The association of real estate agents waits quarterly sale prices for existing homes will fall from year-ago levels in the second and third quarters of 2023, while the Mortgage Bankers Association anticipates year-over-year declines in the median sale price of existing homes in the first three quarters of 2023, according to the most recent forecasts from the two trade groups.
As with many changes in the housing market in recent years, house prices have impacted by mortgage rates, says Daryl Fairwealther, Redfin’s chief economist. In February 2022, house price gains were still hotwhile the average 30-year fixed mortgage rate, although up from lows below 3% in 2021, remained below 4%, according to Freddie Mac.
As higher mortgage rates reduce buyer demand, home sales prices from the start of the pandemic loom large. “At this time last year, there was, I think, legitimately a price bubble going on,” says Daryl Fairweather, chief economist at Redfin. For buyers bidding on homes when mortgage rates were very low, getting a low-rate mortgage was worth paying more than the asking price for a home, Good weather said barrons earlier this week.
SO mortgage rates have gone up, climbing above 5.5% in mid-June for the first time since 2009, according to Freddie Mac. At the end of the year, the average 30-year fixed mortgage rate was 6.4% after peaking above 7% in October and November, the highest rate since 2002.
Home sales – and prices – have also retreated. Homes in January sold at the slowest seasonally adjusted annual rate since October 2010, according to the Realtors group’s existing home sales report. The median selling price for existing homes, including co-ops and condos, at $359,000, was about 13% below the seasonal peak of the previous year, which is higher than the typical decline in peak prices. to January by about 8%, based on historical data.
“Prices fell as soon as mortgage rates rose,” Fairweather said. The economist does not expect prices to shake off the crisis anytime soon. Fairweather expects year-over-year price changes to remain negative for most of the spring, barrons Previously reported. “Mortgage rates are still high, which is why we’re seeing these year-over-year comparisons turn negative,” she said.
Write to Shaina Mishkin at firstname.lastname@example.org