US Home Prices See Biggest Annual Drop in Over a Decade

A sold sign is posted in front of a house in Washington on Feb. 26, 2022. (Stefani Reynolds/AFP via Getty Images)

Home prices have registered their biggest annual decline in over 10 years, according to real estate brokerage Redfin, with price drops led by “pandemic boomtowns and pricey Bay Area markets.”

Median U.S. home price declined by 3.3 percent in March to $400,528—the biggest year-over-year drop since 2012—per an April 19 Redfin press release. The largest drop in March was registered in Boise, Idaho, where prices fell by 15.4 percent from a year back. In the next place was Austin, Texas, which saw a 13.7 percent price drop, followed by Sacramento, California, with 11.9 percent; San Jose, California, with 10.5 percent; and Oakland, California, with a 9.7 percent decrease.

Boise Redfin real estate agent Shauna Pendleton points out that she was “consistently busy” during the fall. However, “things got really quiet” in March following the collapse of the Silicon Valley Bank.

“That killed the buyer momentum that had been building and brought us right back to where we were last year when mortgage rates shot up. There’s this fear that everything will crash.

“There are bank failures, inflation, recession fears, mortgage-rate volatility, a war in Ukraine, spy balloons—some people are wondering if they should pull their money out of the bank and park it in a safe rather than spend it on a new home,” Pendleton said.

Declining Mortgage Applications, Affordability Concerns

Mortgage applications are also decreasing. According to the Mortgage Bankers Association (MBA), mortgage loan application volume fell 8.8 percent on a seasonally adjusted basis for the week ending April 14 from a week earlier.

“Last week’s increase in mortgage rates prompted a pullback in application activity. With more first-time homebuyers in the market, we continue to see increased sensitivity to rate changes,” said Joel Kan, MBA’s vice president and deputy chief economist, according to an April 19 news release.

“The 30-year fixed rate increased 13 basis points to 6.43 percent, which led to purchase applications declining 10 percent. ... Affordability challenges persist and there is limited for-sale inventory in many markets across the country, so buyers remain selective on when they act.”

According to the results of a Bankrate survey published on April 19, personal affordability issues were cited as a challenge to homeownership by 73 percent of non-owners.

While 46 percent said they did not have enough income, 42 percent felt home prices were too high, 40 percent admitted that they were not in a position to afford a down payment, and 29 percent saw mortgage rates as being too high.

Low Inventory, Baby Boomers Buying Homes

The pool of sellers who are willing to sell their homes is tightening. Elevated mortgage rates are prompting sellers to stay put. Many homeowners are hesitant to sell in the current market as this would mean they may have to pay a higher mortgage rate for a new home.

“One of my sellers recently got multiple offers on their home, but pulled the listing off the market when they found out their interest rate was going to double,” said Jennifer Bowers, a Redfin real estate agent in Nashville.

“There are a lot of homeowners who don’t want to give up their 2.5 percent or 3 percent rate for a 6.5 percent rate. Both buyers and sellers are having a tough time adjusting because rates are swinging up and down so quickly.”

Meanwhile, according to a new study by the National Association of Realtors (NAR), baby boomers—people aged 58 to 76—were the largest home buyers in 2022. Baby boomers accounted for 39 percent of home buying last year, up from 29 percent in 2021. In contrast, the millennial share fell to 28 percent from 43 percent.

In an interview with The Epoch Times, Jessica Lautz, NAR deputy chief economist and vice president of research, said that baby boomers may have an easier time buying homes as they do not have to rely on their savings for a down payment.

“These homeowners have a lot of housing equity, and they made substantial gains over the last two years as home prices continue to rise,” she said. “Some of them are now able to pay cash for a new home after selling their house.”