Home Prices Fell in February for First Time in 11 Years

U.S. sales of existing homes jumped 14.5% from prior month, but well down from year earlier

Nicole Friedman

Updated March 21, 2023 at 10:46 am ET

The national median existing-home price fell 0.2% in February from a year earlier to $363,000, the first year-over-year decline since February 2012, the National Association of Realtors said Tuesday. Median prices are down 12.3% from their record $413,800 in June. Price figures aren’t adjusted for seasonality.

Sales of previously owned homes, which make up most of the housing market, rose 14.5% in February from the prior month to a seasonally adjusted annual rate of 4.58 million, breaking a 12-month streak of declines, NAR said. February sales fell 22.6% from a year earlier.

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Existing-home sales had slid for a year. A surge in mortgage rates in 2022 due to the Federal Reserve’s actions to tame inflation made home purchases unaffordable to many buyers, pushing them out of the market. Demand slowed sharply in some markets, especially in Western states.

After hitting a 20-year high above 7% in October and November, mortgage rates ticked lower in early 2023, spurring an increase in home-buying activity.

“Home sales, I think, have already bottomed out,” said Lawrence Yun, NAR’s chief economist. “Mortgage rates were somewhat lower in January and February, and people…wanted to take advantage.”

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Fed officials are deciding this week whether to keep raising interest rates or keep rates steady. The collapse of Silicon Valley Bank and Signature Bank and the takeover of Credit Suisse Group AG by UBS Group AG have increased uncertainty about the Fed’s decision. The Fed officials’ two-day meeting ends Wednesday.

The current housing-market slowdown is one of the main ways that the Fed’s effort to combat inflation by increasing interest rates is playing out. Housing is one of the most rate-sensitive economic sectors, and high housing costs have been a big contributor to inflation.

Economists surveyed by The Wall Street Journal had estimated that sales of previously owned homes rose 5% in February from the prior month.

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Homes typically go under contract a month or two before the contract closes, so the February sales data largely reflect purchase decisions made in January and December.

Mortgage rates rose for five straight weeks in February and early March, stalling some of the market’s momentum. But rates fell in the week ended March 16 to 6.6%, according to Freddie Mac, after the failure of two U.S. banks unsettled investors.

“As long as mortgage rates continue to decline or trend down, you’re going to see more activity,” said Orphe Divounguy, a senior economist at Zillow Group Inc. “Buyers have been very responsive to changes in mortgage rates.”

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But if consumers become more anxious about the economy entering a recession, that could weigh on demand, he said.

Sales of previously owned homes make up most of the housing market.Photo: Tiffany Hagler-Geard/Bloomberg News

The spring is typically the most active season for home sales, because the weather is warmer and many families with children want to move into a new home over the summer, before the school year starts. A slow spring for home sales could weigh on revenues for home builders, mortgage lenders and real-estate brokerages, and reduce purchases of furniture, appliances and renovation services.

The market is much less competitive than it was during the pandemic-driven housing boom in 2021 and early 2022. Real-estate brokerage Redfin Corp. said that about 45% of offers written by its agents faced competing bids in February, down from 66% of offers in February 2022.

The housing-market slowdown has been most pronounced in the West, especially in pricey cities like San Francisco or areas like Boise, Idaho, where home prices skyrocketed during the pandemic.

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Existing-home sales rose the most month-over-month in the West, up 19.4%, and in the South, up 15.9%. Median prices fell from a year earlier in the West and Northeast, while they rose year-over-year in the Midwest and South.

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Bill and Emily Schumann started house hunting in the Los Angeles area in early 2023, a few months after having their first child. They found a three-bedroom house that had been on the market since August and bought it in March for about 4% below the most recent listing price. They used an adjustable-rate mortgage that carries a lower interest rate in the first 10 years of the loan.

“I found the slowdown in the market to be good because at least we had time” to make a decision, Mr. Schumann said. “We just wanted the playing field to be a little more level.”

In many markets around the country, the inventory of homes for sale remains below normal levels, which could support home prices, economists and real-estate agents say.

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Emily and Bill Schumann bought their first house near Los Angeles in March.Photo: Emily Schumann

Many homeowners have rates on their mortgages below 4%, and they are reluctant to give up their current rate for a higher rate on a new home.

“Surprisingly, we are finding that the buyers are still out there” despite the increased mortgage rates, said Ryan Connolly, a real-estate broker based near Buffalo, N.Y. “It’s the sellers that…are holding off right now.”

Nationally, there were 980,000 homes for sale or under contract at the end of February, unchanged from January and up 15.3% from February 2022, NAR said. At the current sales pace, there was a 2.6-month supply of homes on the market at the end of February.

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The typical home sold in February was on the market for 34 days, up from 33 days the prior month, NAR said.

The share of first-time buyers in the market was 27% in February, down from 29% a year earlier. About 28% of February existing-home sales were purchased in cash, up from 25% in the same month a year ago, NAR said.

Housing starts, a measure of U.S. home-building, rose 9.8% in February from January, the Commerce Department said last week. Residential permits, which can be a bellwether for future home construction, rose 13.8%.

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46079908)

if nominal house of the price stays the same, there's a substantial drop in the real value of the house for anyone whose income has risen w inflation.

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46080963)

ya bro. Totally

https://www.cnbc.com/2021/11/10/home-prices-are-now-rising-much-faster-than-incomes-studies-show.html

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46087053)

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46087055)

Sorry bro. Study some logic or something?

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46087084)

Also, yay lol @ 1/3 of Americans. More inequality and more distrust in society. This is so great. I am so glad housemos got dat unrealized/untapable equity in excharge for if their family member drives to the wrong part of town they will get raped and murdered. yay good trade

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46087136)

and yes, inequality is a good thing. that shitlib "everyone should have the exact same shit" nonsense is why everything in this country has gone to shit. maybe you don't agree because you're a lib/jew but it's true.

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46087184)

"Earned" inequality is a good thing. Inequality because my family got there first and let's pull the ladder up now to protect our status is faggot.

"everyone should have the exact same shit" is a false argument that I have never made and no one is making that. Jesus you faggot really like to counter arguments no one has made here.

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46087197)

false statement. producing generational wealth is the entire point of this country. go the fuck back to israel if you don't like it here.

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46087206)

https://redf.in/xyeLmp

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46086246)

idk why this bort is so thrilled about housing prices crashing anyway. aren't we all 30/40mos? i would figure almost everyone here is a homeowner.

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46087089)

so why do you feel like you have some special insight about the housing market? just looking at the numbers so far: they look about where i'd expect them to be. i wouldn't be surprised if there was a huge crash or if housing prices continued to climb. but it seems like a lot of people here are really emotionally tethered to this shit. why?

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46087104)

Some people don't want a basic need like shelter to owned only by elites or through those where it was passed down by generations. Some of us don't want a low-trust society where everyone is out for themselves and fuck all others. Why don't go and your ilk go live in Brazil if you want.

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46087113)

i'm not talking about what i want, i'm talking about the way things are. you're acting just like all your crypto detractors do with you. housing prices are up like 25% since 2020 and have taken an almost imperceptible dip. yet everyone here is ronpaul.gif IT'S HAPPENING about the upcoming nationwide housing collapse. how is this any different than people celebrating crypto being done here despite it growing 10000% over the past decade?

https://fred.stlouisfed.org/series/MSPUS

i think you're emotionally biased and this is just what you want to happen, and you're not looking at it objectively.

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46087135)

You are not making any points, you are merely arguing against points that were never raised, pls killself.

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46087143)

i think that you're wishing for more instability because that'll accelerate a potential redneck revolution, and that hope creates bias in your predictions. you're not looking at things objectively. your predictions are based on what you hope will happen.

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46087154)

High costs of a need for the population = bad. Thinking shelter, food, healthcare, security, education, etc.

Shelter is retardedly overpriced due to a tyranny of the masses (homeowners make you 2/3rd of Americans plus the elites who control the laws are overwhelmingly large shelter owners).

Link to me even suggesting a crash was coming? I will wait.

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46087171)

"Link to me even suggesting a crash was coming? I will wait." -> you've called several people (including me) a retard for predicting housing prices aren't going to crash immediately. thus it seems like you think it's obvious they will. again, it's very hard to pin down your beliefs when your poasts are filled with insults and sarcasm. how about you just clearly tell me what your position is instead of saying "LINK!? LINK!? LINK!?" when i try to divine what it is based on you calling people retards.

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46087193)

I literally in the previous poast poasted my position. I don't have a position if the market will decline or lot. I think it should, but markets are not rational and my view of it declining is based on my expectation of rising unemployment + higher mortgage rates which if that doesn't occur, then we will see no dip in housing prices.

Pls killself retard

(http://www.autoadmit.com/thread.php?thread_id=5310536&forum_id=2#46087205)