May 23, 2024

Brighton Journal

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Home prices are falling by the most in 11 years as mortgage rates rise

Home prices are falling by the most in 11 years as mortgage rates rise

The US housing market has slowed over the past year, as rising mortgage rates have kept potential buyers away.
Getty Images / Mark Wilson

  • The National Association of Realtors said the median US home price fell nearly 2% year over year in April.
  • This is the largest decline since January 2012.
  • The housing market slowdown comes as rising mortgage rates drive potential buyers away.

US home prices just posted their biggest annual decline in more than 11 years, with rising mortgage rates slowing.

The national median price for existing homes fell 1.7% to $388,800 last month, according to data from National Association of Realtors The largest decline in the measure year-on-year since January 2012.

Median prices are now down 6% from their peak of $413,800 last June.

The downturn comes amid a rapid rise in mortgage rates, with the average 30-year fixed-rate mortgage rising from 5.25% to 6.35% over the past year, according to data from Freddie Mac.

This will likely affect demand by making homes less expensive for most buyers, and discouraging people locked in with low mortgage rates from selling their homes.

Mortgages have become more expensive over the past year due to sharp interest rate increases by the Federal Reserve.

The central bank has raised its benchmark borrowing costs from near zero to more than 5% over the past year in an effort to bring down soaring rates – and while inflation appears to be calming and approaching the Fed’s 2% target, this is weighing. Some stocks, as well as bonds and housing.

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There was also a sharp drop in sales activity along with a slump in prices, as total completed transactions for existing homes fell 3.4% between March and April and more than 23% year-over-year.

The slowdown was particularly felt in the western half of the US, with prices still rising across much of the east.

Read more: US commercial real estate prices fell for the first time in 12 years – and likely to fall further, Moody’s warns