Home prices in March saw the biggest annual drop since 2012 as pending home sales continue to abate, according to a new report.
Last month, median U.S. home prices dropped – led by pandemic boomtowns and pricey Bay Area markets – by 3.3% to $400,528, according to real estate brokerage Redfin.
This comes as pending home sales fell to their lowest level since the start of the pandemic in part because elevated mortgage rates diminished demand and a lack of homes for sale limited purchases, Redfin reported.
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Prices in Boise, Idaho, fell more than any other metro across the U.S. in March, with costs slipping 15.4% year over year, according to Redfin. In the area, pending home sales dropped 78.8% year over year, which also marked the biggest drop in pending home sales.
By comparison, pending sales fell 26.6% nationwide on a seasonally-adjusted basis, Redfin reported.
Pandemic hotspots and expensive coastal housing markets are cooling quite quickly because home prices, which overheated in recent years, are “coming back down to earth after many buyers were priced out.”
In May 2021, prices in the Boise area surged a record 40.9%, according to Redfin. Comparatively, the national record increase was 26% during the same month. At the time, mortgage rates were low and remote work and relatively affordable housing brought in buyers from more expensive parts of the country, according to Redfin.
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Boise Redfin real estate agent Shauna Pendleton noticed a particular slowdown in activity in March right after the collapse of Silicon Valley Bank.
“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,” Pendleton said. “There’s this fear that everything will crash.”
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Pendleton added: “There are bank failures, inflation, recession fears, mortgage-rate volatility, a war in Ukraine, spy balloons – some people are wondering if they should pull their money out of the bank and park it in a safe rather than spend it on a new home.”
Meanwhile, markets that didn’t heat up quite as much during the pandemic are “holding up relatively well,” Redfin said, noting that pending sales fell the least in Fort Worth and Dallas, Texas, as well as Indianapolis, Indiana; Cincinnati, Ohio; and Buffalo, New York.