For the first time in three years, the median U.S. home price is showing a decline. Real estate brokerage firm Redfin reports a decrease in home prices across major markets. Two weeks ago, prices fell by 0.2% compared to the previous year. Last week, prices decreased by 0.1%, bringing the median home price to $389,601.
Daryl Fairweather, Redfin’s chief economist, attributes this trend to rising mortgage rates. With rates above 7%, potential buyers are hesitant, decreasing market competition. Buyers who proceed often face higher mortgage payments, impacting affordability.
Redfin’s data reveals a consistent rise in prices since 2020. During the pandemic, home prices surged. In February 2020, the median home price was $259,000 and increased to $335,000 two years later. Prices experienced a dip in 2023 due to climbing mortgage rates, eventually stabilizing and then rising slowly.
Fairweather highlights the psychological impact of this trend. Despite slower growth than inflation, homeowners valued the rising estimates of their properties. Recently, a small but significant change occurred. Last week, the highest median mortgage payments recorded by Redfin were $2,786, marking a 10% rise from the previous year.
Different cities show varied price movements. For instance, Austin experienced a notable decline of over 4% compared to last year. Conversely, San Francisco witnessed a 15% increase. Cities like Pittsburgh and Cleveland remain attractive to buyers, with price hikes of 7% and nearly 5%, respectively.
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