Redfin Reports Home Prices Fell 1% in February, First Annual Drop Since 2012

Rhea-AI Summary

The median U.S. home price fell 1.2% in February 2023, marking the first year-over-year decrease since 2012, according to Redfin. High mortgage rates have cooled buyer demand, compelling sellers to adjust pricing expectations. In February, only 44.9% of homes sold quickly, down from 60.2% a year ago. Despite a slight uptick in pending sales, they remain 26% lower than last year. Closed sales improved by 1.8% month-over-month but are down 22.5% year-over-year. New listings hit a record low, falling 23.3% year-over-year. The average 30-year mortgage rate dropped to 6.54%, encouraging some buyers back into the market.

Positive

• Closed home sales rose 1.8% month-over-month, marking improvement.
• The average 30-year mortgage rate decreased to 6.54%, potentially increasing buyer activity.

Negative

• The median home price declined 1.2%, the first year-over-year drop since 2012.
• Pending home sales are down 26% year-over-year, indicating ongoing market weakness.
• New listings fell 23.3% year-over-year, suggesting seller reluctance.

Prices declined as elevated mortgage rates slowed homebuyer demand, with prices in Austin and San Jose falling 12 times the national paces

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) —The median U.S. home price fell 1.2% in February marking the first year-over-year decline since 2012, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

Sellers have been forced to lower their expectations because high mortgage rates have put homebuyer demand on ice.

“Buyers are struggling because higher interest rates have increased the cost of homeownership, and sellers are struggling because they’re still adjusting to the fact that their home won’t sell for what their neighbor’s did a year ago,” said Andrew Vallejo, a Redfin real estate agent in Austin, TX, which has seen one of the largest home-price declines in the country. “The drop in prices is bringing more house hunters off the sidelines, but they’re in no rush because rates are high and they have the upper hand.”

Just under half (44.9%) of homes that went under contract in February did so within two weeks, down from 60.2% one year earlier, as house hunters sussed out whether to buy now or wait. A buyer Vallejo recently worked with was about to close on a $395,000 home, which seemed like a good deal because the same floorplan down the block sold for $460,000 last summer, but is now reconsidering because a nearly identical home just hit the market for $370,000.”

It’s worth noting that the housing market shifted in March following the collapse of Silicon Valley Bank. Ongoing turmoil in the banking sector lowered the likelihood of the Federal Reserve hiking interest rates much more this year. That caused mortgage rates to drop, which brought more homebuyers back to the market. The average 30-year-fixed mortgage rate was 6.54% as of Thursday morning, down from nearly 7% at the end of February. The decline comes after rates jumped by almost a whole percentage point during the month of February.

Home Sales, Competition Hold Steady Following Months of Declines

Home purchases continued to level off in February following a sharp plunge in the second half of last year. Pending home sales have now hovered around the same level since November. They rose 0.3% in February from the month before on a seasonally-adjusted basis, and were down 26% from a year earlier—an improvement from the 35.5% record annual drop in the fall.

Closed home sales showed signs of improvement as well, rising 1.8% from January—the largest month-over-month increase in over a year on a seasonally-adjusted basis. Closed sales fell 22.5% year over year, an improvement from the 35.1% record annual decline at the start of 2023. Sales that closed in February primarily went under contract in December and January, so the improvement is likely a reflection of the decline in mortgage rates during those months that temporarily boosted demand.

Homebuyer competition also leveled off in February. Just under half of home offers (45.2%) written by Redfin agents faced bidding wars. The bidding-war rate has now hovered around the same level for four months following nine months of declines. Still, it’s much lower than it was in February 2022, when 66.4% of offers encountered competition.

Home Listings Continue to Fall as Sellers Remain on the Fence

New listings in February were at the lowest level on record aside from the start of the pandemic. They fell 23.3% year over year on a seasonally-adjusted basis and were down 3.5% from the prior month.

Homeowners have been hesitant to put their properties up for sale because many of them have locked in mortgage rates substantially below today’s level. They’re also on the fence because they see sellers in their neighborhood slashing their listing prices. One in seven (14.2%) homes for sale had a price cut in February. While that’s down from a peak of 22% in the fall, it’s still more than double the 5.7% rate of a year earlier.

National Highlights

	February 2023	Month-Over-Month Change	Year-Over-Year Change
Median sale price	$386,721	1%	-1.2%
Pending home sales, seasonally adjusted	394,240	0.3%	-26%
Homes sold, seasonally adjusted	441,412	1.8%	-22.5%
New listings, seasonally adjusted	461,534	-3.5%	-23.3%
All homes for sale, seasonally adjusted	1,585,889	-1.8%	11.7%
Months of supply	2.6	-0.7	1.1
Median days on market	52	1	27
Share of for-sale homes with a price drop	14.2%	-3.1 ppts	8.6 ppts
Share of homes sold above final list price	23.6%	2.3 ppts	-23.7ppts
Average sale-to-final-list-price ratio	98.2%	0.4 ppts	-3 ppts
Share of home offers written by Redfin agents that faced competition, seasonally adjusted	45.2%	0.2 ppts	-21.2 ppts
Pending sales that fell out of contract, as % of overall pending sales	13.8%	0 ppts	2.4 ppts
Average 30-year fixed mortgage rate	6.26%	-0.01 ppts	2.5 ppts

Metro-Level Highlights

• Pending sales: In Baton Rouge, LA, pending sales fell 69.1% year over year, more than any other metro Redfin analyzed. It was followed by Allentown, PA (-54.4%), Honolulu (-53.8%), Greensboro, NC (-49.3%) and Las Vegas (-47.9%). Pending sales rose in just four metros: Dallas (3%), Buffalo, NY (2.9%), Indianapolis (2.3%) and Cincinnati (1.3%).
• Closed sales: In Miami, closed sales dropped 44.2% year over year, more than any other metro Redfin analyzed. Next came New York (-39.8%), San Jose (-38%), Baton Rouge (-37.7%) and Nassau County-Suffolk County, NY (-37.2%). They fell the least in Dallas (-1.3%), Richmond, VA (-7.7%), Fort Worth, TX (-9.6%), Cleveland (-10.1%) and Dayton, OH (-12.8%)
• Prices: Median sale prices fell from a year earlier in 31 metros, led by San Jose (-13.1%), Austin (-12.4%), Oakland, CA (-11.3%), Sacramento, CA (-8.2%) and Oxnard, CA (-7.3%). The biggest increases were in Omaha, NE (11.8%), Knoxville, TN (11.5%), West Palm Beach, FL (11.4%), Columbus, OH (10.8%) and Milwaukee (10.4%).
• Listings: New listings fell the most from a year earlier in Allentown (-53.2%), Greensboro (-45.8%), San Jose (-44.2%), Oakland (-43.6%) and Sacramento (-42.7%). They rose in just two metros—McAllen, TX (10.1%) and North Port, FL (1.6%)—and were unchanged (0%) in Buffalo. The smallest declines were in Fort Worth (-2.9%) and Nashville (-3.2%).
• Supply: Active listings rose the most from a year earlier in North Port (103.1%), Austin (78.6%), Nashville (71.7%), Fort Worth (69%) and Tampa, FL (62.5%). They fell the most in Allentown (-34.4%), Cincinnati (-31.8%), Greensboro (-28.7%), Milwaukee (-26.9%) and Hartford, CT (-22%).
• Competition: In Colorado Springs, CO, 26.9% of home offers written by Redfin agents faced competition, down from 79.6% a year earlier. That 52.6-percentage-point decline is the largest decline among the metros Redfin analyzed. Next came Las Vegas (-44.6 ppts), Charlotte, NC (-42.6 ppts), San Antonio (-41.8 ppts) and Raleigh, NC (37.3 ppts). Competition rose in just one metro Redfin analyzed: Providence, RI (2.8 ppts). It fell the least in San Jose (-1.4 ppts), Baltimore (-1.7 ppts), Philadelphia (-7.6 ppts) and Orlando, FL (-8 ppts).

To view the full report, including charts, additional metro-level data and methodology, please visit: https://www.redfin.com/news/housing-market-tracker-february-2023

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We sell homes for more money and charge half the fee. We also run the country's #1 real estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 5,000 people.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230317005066/en/

Redfin Journalist Services:

Kenneth Applewhaite, 206-588-6863

press@redfin.com

Source: Redfin

FAQ

What is the current state of the housing market according to RDFN?

The housing market is experiencing a downturn, with a median U.S. home price drop of 1.2% year-over-year and a significant decrease in pending sales.

How have mortgage rates impacted homebuyer demand for RDFN?

Elevated mortgage rates have slowed homebuyer demand, with many buyers hesitant to purchase due to increased costs associated with homeownership.

What were the findings regarding closed home sales in February for RDFN?

Closed home sales increased by 1.8% month-over-month but remain down 22.5% compared to the previous year, showcasing ongoing challenges in the market.

How did new home listings change in February according to RDFN?

New home listings fell by 23.3% year-over-year, reaching the lowest level recorded except during the pandemic.

What factors contributed to the decline in home prices reported by RDFN?

High mortgage rates and sellers adjusting expectations due to decreased homebuyer interest contributed to the decline in home prices.