The latest report from the United States’ National Association of Realtors (NAR) noted that the median price for a home was lower in February this year compared to the same time last year. This marks the end of a period of year-over-year price increases that ran for nearly a decade.
As of February 28, 2023, the median price for residential real estate was pegged at $363,000, a 0.2% drop from February 2022.
Likewise, buying a home in the Western United States now costs 5.6% less than it did in February of last year. Meanwhile, in the northeast of the country, where homes are pricier, home prices dropped by 4.5%.
However, this is not the case elsewhere in the country. Home prices in the southern states were up by 2.7%. Those in the midwest increased by 5%.
Not the End of It…Yet
Despite the price drop, the NAR notes that the decrease in the median home price is so small it’s practically flat. This prompted its chief economist Lawrence Yun to say that this is not yet the bottom for home prices and that the agency expects to see a continuing correction in prices.
However, it is unlikely that we’ll be seeing a significant price drop anytime soon.
For one thing, the inventory of available homes remains disappointingly low. As of the end of February of this year, the total housing inventory in the United States stands at 980,000 units – virtually unchanged from the total seen in January. As a result, a number of properties have received more than one offer from buyers in recent weeks.
A Buyers’ Market
Last month, the sale of existing homes was quite strong thanks to slightly lower mortgage rates. According to Realtor.com economic data analyst Hannah Jones, pent-up housing demand is still greatly dependent on mortgage rate changes.
For his part, NAR’s Yun expressed surprise at the increase in home sales, but he admitted that it is proof that homebuyers are sensitive to changes in mortgage rates. He pointed out that buyers were keen to take advantage of the way mortgage rates went down to around 6.3% at the beginning of the year.
Yun added that potential homebuyers who have been on the lookout for a while will also pounce on listings ASAP if these meet their requirements.