As per a recent Redfin report, the median value of houses sold in the US fell by 1.2% in February and reached $386,721. This is the first instance in more than ten years that there has been an annual decline in housing costs. With high mortgage rates, home vendors are confronting a tough market and must modify their assumptions since the demand from potential homebuyers has stalled.
Andrew Vallejo, a real estate agent at Redfin in Austin, TX, where one of the largest home-price decreases has been observed, stated that buyers are finding it tough due to the surge in interest rates that have led to an increase in the cost of owning a home. On the other hand, sellers are facing challenges as they are still coming to terms with the fact that their house may not sell for the same price as their neighbor’s did a year ago. Nevertheless, the dip in prices is encouraging more potential buyers to enter the market, although they are not in a hurry as they have an advantage due to the high rates.
In February, less than half (44.9%) of the homes that entered into a contract did so within two weeks, which is lower than the 60.2% from a year before. This indicates that potential buyers are evaluating whether they should purchase immediately or hold off. Andrew Vallejo assisted a buyer who was on the verge of finalizing the purchase of a $395,000 home, which seemed like a great deal because a similar floor plan in the same vicinity sold for $460,000 last summer. However, the buyer is now reconsidering the purchase as an almost identical home has just hit the market for $370,000.
It is essential to highlight that the housing market experienced a change in March, triggered by the downfall of Silicon Valley Bank. The persistent chaos in the banking sector decreased the possibility of the Federal Reserve raising interest rates significantly this year. As a result, mortgage rates decreased, attracting more potential homebuyers to the market. As of Thursday morning, the average rate for a 30-year fixed mortgage was 6.54%, which is lower than the nearly 7% rate at the end of February. This decline occurred after rates surged by nearly a full percentage point during February.
