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The median U.S. home price tallied its largest annual drop since 2012 in March, according to a new analysis released Wednesday.
The median home price dropped 3.3 percent between March 2022 and March 2023, to $400,528, according to an analysis by Redfin.
Pandemic-era boomtowns and pricy tech hubs fueled the drop, with prices in Boise, Idaho, plunging by 15.4 percent from a year earlier, more than any other city analyzed in the report. Austin followed, with prices falling 13.7 percent while Sacramento experienced the third-highest decline at 11.9 percent.
Boise also experienced the largest drop in pending home sales in March, notching a 78.8 percent year-over-year decline. A Redfin agent from the Idaho city said Silicon Valley Bank collapse brought the market to a halt for her.
“I was consistently busy in the fall, but things got really quiet in March after the collapse of Silicon Valley Bank,” Shauna Pendleton said in a statement. “That killed the buyer momentum that had been building and brought us right back to where we were last year when mortgage rates shot up. There’s this fear that everything will crash. There are bank failures, inflation, recession fears, mortgage-rate volatility, a war in Ukraine, spy balloons — some people are wondering if they should pull their money out of the bank and park it in a safe rather than spend it on a new home.”
Ironically, this has created the best environment to purchase a home in Boise in months, Pendleton added.
“The irony is that it’s actually a pretty good time to buy in Boise. The dropoff in homebuyer demand means prices are falling and many sellers — especially homebuilders — are offering concessions. It’s not uncommon for a buyer to get a home for less than the list price,” she said.
Prices in pandemic boomtowns like Boise are falling largely because they grew at such an unsustainable rate for the better part of 2020, 2021 and the first half of 2022. Boise saw prices surge 40.9 percent annually in May 2021 — compared to national prices, which rose 26 percent the same month, according to Redfin — as a perfect storm of low mortgage rates, remote work and comparatively affordable homes brought a tide of relocators to the Idaho capital.
Conversely, markets that didn’t see as much attention during the pandemic have remained relatively stable.
Indianapolis, Indiana; Cincinnati, Ohio; Buffalo, New York; and Fort Worth and Dallas in Texas all experienced less dramatic decreases in pending home sales, according to Redfin. Prices actually rose more than 10 percent in Milwaukee, Wisconsin; El Paso, Texas; Omaha, Nebraska; Camden, New Jersey; and Knoxville, Tennessee — bucking the national trend.
In Nashville, the market has slowed significantly from its pandemic peak, but demand has remained stable and prices are up about 1 percent from a year ago.
“Nashville’s housing market is steady,” Redfin agent Jennifer Bowers said in a statement. “We’re still seeing a lot of folks move in from Chicago, Texas, California and Colorado — places people haven’t historically come to Nashville from. Some are moving in for political reasons, some for our low taxes, and many for our relatively affordable home prices.”
“Prices are high in the eyes of many locals,” Bowers added, “but we’re still pretty affordable compared to a lot of parts of the country.”
The national dropoff in home prices has largely been spurred by higher mortgage rates, which are causing would-be sellers to stay put instead of relinquish lower rates. New listings fell 23.3 percent annually in March, resulting in a lack of homes for sale and increased competition for homebuyers.
“Low inventory is driving the market and causing bidding wars to intensify,” Chicago Redfin agent Dan Close said in a statement. “I have two listings that have each received around 10 offers in the past few weeks.”
“Buyers’ agents are trying so hard to find homes for their clients that they’re calling me before my listings even hit the market,” Close added. “I did a consult with a seller recently and before we had anything in ink, three brokers phoned to say they’d heard about the home through word of mouth and wanted to know more. We had two above-asking offers on the $2 million home within 24 hours. There weren’t even any photos online yet.”
