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.
Causes of The Decline
This drop in home prices is attributed to a number of different factors, most significantly a sharp spike in mortgage interest rates. While interest rates seemed to be going down briefly in late January into February, March saw a dramatic increase from around 6% interest for 30-year fixed rate mortgages, to 6.85% by the end of the month. In addition, homes are staying on the market for longer, increasing from an average of 17 days last year to an average of 29 days this year, which is indicative of a decline in demand.
Signs of Distress for the Housing Market
While these are all potentially serious issues, there are signs that things could get even worse. This is because inventory is down by 41%, meaning there are far fewer houses on the market, which helps to keep prices higher than they otherwise might be. If more houses start going on the market, whether as a result of new construction or current homeowners putting their homes up for sale, it could cause home prices to decline even further.
How This Could Affect You
If you are a prospective homebuyer, the notion that home prices might be decreasing may sound like good news, but high interest rates could still make purchasing a home cost-prohibitive. As a seller, this news may be disconcerting, as it indicates that you may struggle to sell your home for the price you may want. That is why you should make sure to explore all your available options when you choose to buy or sell a home.
At Liongate Homebuyers, we assist our clients with a variety of services related to buying and selling real estate, including purchasing homes for cash. We have experience handling real estate financing, especially for developers and house flippers. If you are interested in selling your home for cash, please contact us at 516-548-6553, or visit our contact page.
