A Drop in Home Prices

This Summer’s highly talked-about mortgage rate hike essentially dumped a bucket of ice water on the housing market. Though, to be fair, that’s exactly what the Federal Reserve was hoping would happen. The average home price for the month of August was down almost 6% from their peak in June, when the median home price hit a record setting national average of $450,000. That 6% drop is the largest 2-month price drop in almost 10 years. 

“The housing market certainly reacts to the monetary policy change,” says Lawrence Yun, the chief economist for the National Association of Realtors. Yun references the 3 percentage point mortgage rate hike that occurred over the Summer and says it’s one of the largest, quickest jumps in such a short time frame- ever. 

Consequently, the number of home sales each month is now down about 20 percent from this time a year ago.

Don’t Call It A Comeback 

Just because home prices are falling doesn’t mean they’re anywhere near where they were pre-pandemic levels. Home prices nationally are still up about 8% from a year ago according to the realtor’s group. Furthermore, because interest rates have jumped, sellers might not have full faith in the public’s buying power so they’re less likely to list their homes right now. This means we are continuing to face a housing shortage and the homes that ARE listed get snapped up in record time. That record? Currently just 16 days on market. 

If you’re hoping to sell then the good news for you is that the buyers that are out there are serious. Good news for buyers? Your average sales prices continue to steadily fall, keeping your hard earned cash in your pocket.