Mixed Messages
U.S. housing prices fall for 1st time since 2012, but monthly sales rise after 12-month slide
The median price for U.S. existing homes fell 0.2 percent in February from a year earlier, to $363,000, the National Association of Realtors said Tuesday, marking the first year-over-year decline in home prices since February 2021. February's prices were down 12.3 percent from a record high in June, but that doesn't necessarily mean a break for prospective homebuyers because mortgage rates have risen at the same time in tandem with the Federal Reserve's inflation-fighting interest rate hikes.
"Many economists expect home prices to keep falling this spring," The Wall Street Journal reports. "But home-buying affordability is likely to remain worse than it was a year ago, because prices would have to drop significantly to fully offset the increase in mortgage rates. The inventory of homes for sale remains below normal levels, which could prevent steep price declines."
The slight decrease in interest rates and home prices did help reverse a 12-month slide in existing home sales, which make up the majority of the housing market, the National Association of Realtors said. Sales of previously owned homes rose 14.5 percent in February from January, though they were down 22.6 percent from February 2022. The February sales data reflects what buyers and sellers were doing in December and January, well before the recent pair of bank failures rattled financial markets and, possibly, consumer sentiment.
The slump in home sales and prices is not just a U.S. phenomenon — property prices have also dropped in Britain, Germany, the Netherlands, Canada, and Australia, The New York Times reports — "but few places have been hit as hard as Sweden, which features an incendiary mix of high levels of household debt and the widespread use of variable or short-term fixed rates on home mortgages loans." Housing prices shot up in Sweden during the COVID-19 pandemic, as they did in the U.S. and elsewhere, the Times says, but Swedish house prices have fallen 15 percent from their peak last March through the end of the year "and have mostly plateaued since then."