March saw the “biggest annual decline” in home prices in the past eleven years, according to an article from the Wall Street Journal. This dramatic decrease in home prices is a significant sign of the state of the housing market, which has been suffering from a decline in demand for months. These issues are blamed primarily on high interest rates, which have made mortgages less appealing for many prospective homeowners.
The Largest Annual Decline in Eleven Years
In March, home prices fell by 0.9% compared to the same time the previous year. At the same time, sales of previously owned homes fell by 22% during the same period. Month over month, home sales fell by 2.4% compared to February. While this may not sound like a major decline, it is the biggest drop in annual prices since 2012, and indicates a housing market in potential trouble.
Homebuilders are foreseeing a decline in demand and the number of new homes to be built in 2023. This is reflected in an overall drop in the number of building permits, which have declined dramatically over the past year. With interest rates on the rise and the price of existing homes falling, there is simply less demand for the construction of new homes.
Nationally, home prices fell for the first time in three years in July, signaling to some that the housing market may be on the verge of a recession. Part of the reason for this anxiety is that this drop is the largest the housing market has seen since 2011, making it the biggest dip in the market in more than a decade. Combined with rising interest rates, high inflation, and an increasing amount of inventory, some economists believe that prices could decline even further in the coming months.
As the amount of housing inventory has increased and prices have fallen, some buyers have become more eager to look for potential homes to purchase. This follows several months of rising interest rates and record-high inflation, which have caused the housing market to cool and prices to drop overall. While this may be less fortunate for some sellers, it could be a good time for reticent buyers to start getting into the market to take advantage of relatively low prices.