Third of US Regions Experienced Decline in Home Prices

Third of US Regions Experienced Decline in Home Prices wsjrenewal

Home prices in the United States experienced their biggest drop in over a decade during the first quarter, with almost a third of metropolitan areas reporting annual price declines, according to the National Association of Realtors (NAR).

California and the Mountain West concentrated the hardest-hit housing markets, with median single-family existing-home sale-price declines of over 13% experienced in San Francisco and San Jose. Austin, Texas, and Boise, Idaho, which had been experiencing a pandemic-driven housing boom, also saw price declines of more than 10%.

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Prices are still rising in many parts of the Midwest, South, and Northeast, while they are sliding in Western states, dividing the housing market in the US into two halves.

Limited inventory continues to drive prices higher in much of the country, but Western markets that were already expensive or experienced the greatest price hikes during the pandemic are now experiencing the fastest declines.

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Higher mortgage rates and limited supply have caused a decline in home sales across the US over the past year, but this has had a mixed effect on home prices. Nonetheless, the number of areas where prices are declining has increased.

NAR revealed that prices fell on an annual basis in 31% of the 221 metro areas it tracks, the highest percentage in 11 years. Lawrence Yun, NAR’s chief economist, stated that home prices are generally lower in expensive markets and higher in affordable ones, but given the current inventory shortage, price declines may be temporary.

NAR reported that the nationwide median single-family existing-home sale price dropped 0.2% in the first quarter from a year earlier to $371,200, marking the first year-over-year price decline since the first quarter of 2012.

However, median prices increased by over 10% from a year earlier in 7% of the 221 metro areas, a deceleration from the fourth quarter when 18% of metro areas reported double-digit-percentage growth.

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In December, Kris Vierhaus and Travis Carter, who were first-time home buyers, viewed a three-bedroom house in San Mateo, California, and they thought that it was overpriced.

They put in an offer in February when the house was still on the market and bought it for approximately 4% below the listing price. Ms. Vierhaus stated that by the time they closed, people were getting asking price or below, and the aggressive offers and bidding wars were no longer happening.

In the first quarter, the typical monthly mortgage payment for a single-family home rose to $1,859, a 33% increase from $1,397 a year earlier, according to NAR.

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

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