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- Median home prices in March dropped 3.3% annually, the biggest decline since 2012, Redfin said.
- Pandemic boomtowns and the San Francisco Bay Area led the price declines.
- “I was consistently busy in the fall, but things got really quiet in March after the collapse of Silicon Valley Bank.”
US home prices in March dropped by 3.3% annually to a median of $400,528, marking the largest decline in 11 years, according to real-estate firm Redfin.
Pandemic boomtowns and the San Francisco Bay Area led the price declines, and last month’s banking turmoil spooked prospective homebuyers, who are already facing high mortgage rates and thin housing inventory.
“I was consistently busy in the fall, but things got really quiet in March after the collapse of Silicon Valley Bank,” said Shauna Pendleton, a Redfin real estate agent in Boise, Idaho. “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.”
Boise led the price drop (15.4%), followed by Austin (13.7%),
Sacramento (11.9%), San Jose (10.5%), and Oakland (9.7%).
To be sure, home prices are now coming back down to earth after previous steep increases in recent years, Redfin said. For example, prices in Boise surged a record 40.9% in May 2021 amid low mortgage rates, the remote-work trend, and relative affordability. Nationwide, prices jumped 26% that month.
But since then, mortgage rates have soared amid Federal Reserve rate hikes. While they have come off last year’s peak of 7%, the 30-year-fixed mortgage rate averaged 6.54% in March, up from 4.17% a year earlier.
Meanwhile, the higher mortgage rates are keeping buyers and sellers on the sidelines, and March saw new listings drop 23.3% year over year, Redfin said.
“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 Nashville Agent Jennifer Bowers.
About 55,000 home-purchase agreements were canceled last month, equal to 14.8% of homes that went under contract, according to Redfin. That’s still below the 2022 peak of 16.8% in October, but up from 11.2% a year earlier.
“This year’s spring homebuying season is lackluster,” said Redfin Chief Economist Daryl Fairweather. “There are some signs of the typical seasonal uptick — homes are selling faster than they were in the winter — but that’s partly because there are so few new listings. Normally we see homebuyers come out in throngs at this time of year, which isn’t happening.”
