Please consider Redfin's housing market update: Home Prices Fall Annually For First Time In A Decade As Mortgage Rates Pass 7%

Key Points

• The median home sale price was $350,246, down 0.6% from a year earlier, the first decline on record. Redfin’s monthly dataset, which goes back through 2012, shows that the last time home prices declined annually was February 2012, when they dropped 1.5%.
• Median sale prices fell in roughly half (24) of the 50 most populous U.S. metros, with the biggest drops in pandemic homebuying hotspots and northern California. Austin (-11% YoY) saw the biggest dip, followed by San Jose, CA (-10.9%), Oakland, CA (-10.4%), Sacramento (-7.7%) and Phoenix (-7.3%). That’s the biggest sale-price drop on record for each of those metros except San Jose.
• Sale prices increased most in West Palm Beach (+15% YoY), Milwaukee (13.2%), Columbus, OH (9.5%), Miami (9.1%) and Fort Lauderdale, FL (7.8%).
• The median asking price of newly listed homes was $382,225, up 0.6% year over year, the smallest increase since April 2020.
• The monthly mortgage payment on the median-asking-price home was $2,520 at a 6.65% mortgage rate, the current weekly average. That’s an all-time high. Monthly mortgage payments are up 28% ($556) from a year ago.
• Pending home sales were down 15% year over year, the smallest decline since July.
• Pending home sales fell in all 50 of the most populous U.S. metros. They fell most in Las Vegas (-55.2% YoY), Austin (-49.5%), Portland, OR (-46.9%), Riverside, CA (-45.4%) and Nashville (-45.3%).
• New listings of homes for sale fell 20.3% year over year. New listings declined in all 50 of the most populous U.S. metros, with the biggest declines in Oakland, CA (-45.1% YoY), Sacramento (-42.6%), Seattle (-42%), San Jose, CA (-41.6%) and Portland, OR (-41.6%).

Is Median Home Price a Good Metric?

Median price is a timely metric. Timeliness is good. 

But when transaction volumes are falling off a cliff (see last two bullet points above), cash buyers and those who are interest rate insensitive, are not pressured by affordability.

Cash buyers can easily (not necessarily do so in every case), artificially increase the median price as mortgage rates wallop anyone who needs a mortgage. 

In contrast, Case-Shiller provides very accurate, yet very lagging information.

 Ten Top Cities - How Much Have Home Prices Declined From the Peak?

Case-Shiller home price data via St. Louis Fed, chart by Mish

The Overall Message

1. The top is in.
2. Pending home sales is an outright disaster everywhere. 
3. Affordability due to rising mortgage rates is the key.
4. Home prices are falling, likely much faster than either median price or Case-Shiller report, due to weaknesses in each way of viewing things.

Point four reflects points two and three. 

The combined overall message of median price and Case-Shiller is telling. 

Existing Home Sales Decline 12th Month

No Rebound in Home Sales 

A brief drop in mortgage rates towards 6.0 percent was not enough to entice buyers in January. Buyers and sellers are on strike.

For discussion, please see No Rebound in Existing Home Sales Despite a Drop in Mortgage Rates

Due to closing lags, perhaps there is a steadying or slight uptick next month. But that will not change the overall dynamic.

Buyers want lower prices, but sellers want the prices they could have gotten 18 months ago. Results are as one should expect: Pending home sales fell in all 50 of the most populous U.S. metros. They fell most in Las Vegas (-55.2% YoY), Austin (-49.5%), Portland, OR (-46.9%), Riverside, CA (-45.4%) and Nashville (-45.3%).

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