Redfin: Home Prices See Sharpest Monthly Drop in Decade

Redfin, Seattle, reported the median U.S. home price fell 3.3% in March to $400,528, the largest year-over-year drop since 2012.

Pandemic boomtowns and pricey Bay Area markets led the price declines in March. In Boise, Idaho, prices fell 15.4% from a year earlier, more than any other U.S. metro area Redfin analyzed. Next came Austin, Texas (-13.7%), Sacramento, Calif. (-11.9%), San Jose, Calif. (-10.5%) and Oakland, CLIF. (-9.7%). Boise also saw the largest drop in pending home sales, with a 78.8% year-over-year decline. Nationwide, pending sales fell 26.6% on a seasonally adjusted basis to the lowest level since onset of the pandemic (April 2020).

Courtesy Redfin, Seattle.

“The irony is that it’s actually a pretty good time to buy in Boise,” said Shauna Pendleton, a Redfin agent based in Boise. “The drop-off in homebuyer demand means that 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.”

Prices in Boise surged a record 40.9% in May 2021 as low mortgage rates, remote work and relatively affordable housing brought in scores of homebuyers from more expensive parts of the country. That compares with a national record increase of 26% the same month.

Meanwhile, elevated mortgage rates are prompting both buyers and sellers to stay put. New listings fell 23.3% year over year in March to the lowest level on record aside from the start of the pandemic on a seasonally adjusted basis. Many homeowners are hesitant to sell because moving would mean taking on a higher mortgage rate when they buy their next home.

And the lack of homes on the market is contributing to the decline in sales, preventing home prices from falling further and leading to bidding wars in some markets. More than two of every five (44.3%) home offers written by Redfin agents faced competition in March. The bidding-war rate has hovered around that level for the past five months following nearly a year of month-over-month declines.

“This year’s spring homebuying season is lackluster,” said Redfin Chief Economist Daryl Fairweather. “There are some signs of the typical seasonal uptick—homes are selling faster than they were in the winter—but that’s partly because there are so few new listings. Normally we see homebuyers come out in throngs at this time of year, which isn’t happening.”