U.S. home prices: how much have they dropped in the last few months?
Prices of homes in the United States went down for the seventh consecutive month at the start of the year as interest rates continue to rise.
Home prices recorded a drop for the seventh-straight month in January, due to the rising level of interest rates putting the squeeze on the housing market. The S&P CoreLogic Case-Shiller US National Home Price Index slid 0.5% in January compared to December.
The drop in prices was reflecting a lower demand for houses in the face of inflation, higher mortgages, and economic uncertainty.
Year-over-year home prices down after 11 years
In February, the average price of a house in the U.S. was lower than it was in the same month last year, marking the end of more than a decade of year-on-year increases, according to a report by the National Association of Realtors.
The average home price was $363,000 in February, a drop of 0.2% from 2022. This was the first time the monthly year-on-year price went down since February 2012.
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Home sales increased in February
According to Realtor.com, sales of houses gained momentum in February as buyers took advantage of slightly lower mortgage rates. This reflects the sensitivity of consumers to even small reductions in mortgage rates. It appears that home buyers who have long been on the lookout for a house snap up a listing immediately if it is a good fit for their requirements.
The Federal Reserve raised its rates last week to a range of 4.75%-5%, and said there might be one more increase this year. This could have an effect on housing prices, as research conducted by the Federal Reserve Bank of San Francisco in March shows that sudden financial policy changes affect these prices in just a matter of weeks.
The researchers also found that home prices tend to go down when mortgage rates are on the rise, because of the increased total cost of owning a home.