U.S. home prices hit a turning point last month, dropping from a year ago for the first time since 2012, according to Redfin Corp.
In the four weeks through Feb. 26, the median price for a typical home was $350,246, down 0.6% from the same period a year earlier, the brokerage said Thursday.
The surge in borrowing costs last year slammed the brakes on the housing market, sidelining buyers and slowing sales. While price declines could bring some slight relief to consumers, higher mortgage rates are squeezing affordability and a lack of homes for sale could limit how far prices will fall.
“Prices falling from a year ago is a milestone because it hasn’t happened since the housing market was recovering from the 2008 subprime mortgage crisis,” said Taylor Marr, Redfin’s deputy chief economist. “Prices will probably decline a bit more in the coming months, but first-time buyers hoping to score a major deal this year are likely out of luck.”
Buyers are still getting squeezed. Mortgage rates are nearly double what they were at the same time last year. One measure showed the average for a fixed-rate, 30-year loan above 7%.
Redfin anticipates that higher rates could lead to a “prolonged winter” for the market.
“Limited inventory and continued interest in turnkey homes in desirable neighborhoods will keep prices somewhat propped up — and high rates will continue to be a hit on affordability,” Marr said.