The US housing market has slowed over the past year as rising mortgage rates deterred potential buyers. Getty Images/Mark Wilson
- According to the National Association of Realtors, the average US home price fell almost 2% year over year in April.
- This is the sharpest drop since January 2012.
- The real estate market slowdown comes as rising mortgage rates deter potential buyers.
US home prices just posted their sharpest annual decline in over 11 years, with rising mortgage rates leading to a slowdown.
According to data from the National Association of Realtors, the nationwide median price for existing homes fell 1.7% last month to $388,800 — the metric’s sharpest year-on-year decline since January 2012.
Average prices are down 6% from their peak of $413,800 last June.
The slump comes amid a rapid rise in mortgage rates, with the average 30-year fixed-rate mortgage rising from 5.25% to 6.35% over the past year, according to data from Freddie Mac.
This is likely to have weighed on demand as homes have become less affordable for most buyers and people who rely on lower mortgage rates are discouraged from selling their homes.
Mortgages have become more expensive over the past year due to the Federal Reserve’s aggressive rate hikes.
To curb rising prices, the central bank raised benchmark borrowing costs from near zero to over 5% over the past year – and while inflation appears to be cooling and closer to the Fed’s 2% target, this is weighing heavily on certain ones Stocks, bonds and real estate.
Alongside the fall in prices, there has also been a sharp drop in sales activity: the total number of completed transactions for existing properties fell by 3.4% between March and April and by over 23% year-on-year.
The slowdown was particularly felt in the western half of the US, while prices were still rising in much of the east.
Continue reading: Commercial home prices in the US have just fallen for the first time in 12 years – and are likely to fall further, Moody’s warns
WATCH NOW: Insider Inc.’s Popular Videos
Loading…