The national median price for an existing home dropped from February 2022 to last month, marking the first year-over-year decrease in prices since February 2012, while home sales climbed for the first time in over a year, according to new data from the National Association of Realtors—the latest indication the cooling housing market could be recovering.
The median price of an existing home fell 0.2% from February 2022 to $363,000 last month, with the biggest price increases in the Midwest and South, according to National Association of Realtors data.
Tuesday’s data means the national median existing home price has now fallen 12.3% from the record high of $413,800 last June.
Even as prices drop, housing sales still fell from 5.92 million units in February 2022 to 4.58 million last month—a 23% year-over-year decrease.
Last month’s sales, however, represent an increase of 14.5% from January, snapping a 12-month streak of monthly decreases, according to the NAR.
Orphe Divounguy, a senior economist at Zillow, called the monthly rise in home sales in February a mixed bag of seasonal factors, saying, “buyers are out in force,” even as sellers stay “on the sidelines,” causing inventory to remain low.
The average 30-year mortgage rate surpassed 7% earlier this month after dropping for several months, nearing its 20-year high of nearly 7.4% last October and reigniting fears a recovery in the housing market might be further down the road (the 30-year average mortgage rate has since declined slightly to 6.67% as of Monday. Ian Shepherdson, chief economist with Pantheon Macro, told Forbes earlier this month he believes home sales will sink to a multi-year low in May if mortgage rates stay around 7%, adding he is “puzzled” by assertions the market is recovering. Hannah Jones, an analyst at Realtor.com, told Forbes last week the recent jump in home prices, along with near 20-year high mortgage rates has meant home buyers are paying “much more” for a home than they were last year, weakening the housing market.
After record low interest rates during the first two years of the Covid-19 pandemic led to an explosion in the housing market, the market started to cool last year following the Federal Reserve’s multiple rounds of interest rate hikes designed to curb soaring inflation, which hit a 40-year high last July. Between November 2021 and November 2022, home sales plummeted more than 35%—the biggest year-over-year decrease since the housing market briefly went cold in the early months of the pandemic, before becoming red hot. High interest rates also corresponded to a drop in home builder confidence in every month of 2022, according to the National Association of Home Builders, though that streak of monthly declines finally broke in January.