U.S. home prices posted their slowest annual growth rate in more than a decade in March, according to Redfin, even as the supply of new properties dwindled and prices never fell completely.
U.S. home prices rose 1.7% in March compared to the same month last year, the slowest annual growth rate on record since 2012, according to the Redfin Home Price Index (RHPI).
Prices rose a seasonally adjusted 0.1% month over month, the third straight month of increases, as high mortgage rates and economic uncertainty dampened buyer demand, according to Redfin.
“Price growth is losing momentum, with annual growth at its lowest level in a decade,” said Chen Zhao, head of economic research at Redfin. “High mortgage rates and global uncertainty are causing some prospective buyers to put a damper on home prices.”
Expanding buyer’s market
Chen Zhao
The setback in demand has shifted negotiating leverage in much of the country. Buyers dominated in 38 of the most populous metropolitan areas in March, up from 29 in the same period last year, according to a separate Redfin market analysis.
Nationally, the number of sellers outnumbers buyers by 43%, close to the largest gap on record since 2013, but buyers in the market are gaining bargaining power as a result.
Texas’ lead declines, San Francisco soars
Home prices fell in 13 major cities in March compared to the previous month on a seasonally adjusted basis. The biggest declines were in Fort Worth, Texas, down 0.8%, followed by Austin, Texas, down 0.7%, followed by Nashville and Oakland, each down 0.6%.
The largest year-over-year declines were in San Antonio, Texas, down 4.1%, Jacksonville, Florida, down 3.5%, and Austin, Texas, down 3%.
San Francisco had the largest monthly increase of 1.2% and the largest annual increase of 13%, which Redfin attributes to the local AI boom. Pittsburgh led all metro areas analyzed with a monthly increase of 2.8%.
Why prices haven’t fallen despite sluggish demand
Redfin pointed out that prices are continuing to rise rather than fall as new listings decline. Rather than listing on a soft market, some homeowners are choosing to maintain the status quo rather than limit supply and create a price floor.
Redfin economists said mortgage rates rose to 6.4% from 6% in March, due in part to soaring oil prices and destabilizing financial markets due to the Iran war. Mr. Zhao said the economic slowdown “could eventually bring down the cost of buying a home enough that people looking for a home could come back.”
For sellers: Best time to buy is late April.
Despite the widespread economic slowdown, late April remains the best time to list a home nationally, according to Redfin and Home Economics analysis. Homes listed during that period are most likely to sell for more than the asking price and do well. Timings vary by region. March tends to be the strongest on the West Coast, and May on the East Coast.
what to see
Federal Reserve Chairman nominee Kevin Warsh will have a Senate confirmation hearing on Tuesday. Gambling markets believe there is a 36% chance that Powell will be confirmed by the end of current Chairman Jerome Powell’s term on May 15, according to economists at Redfin.
Redfin said an unresolved succession issue could result in short-term interest rate fluctuations, but the conflict is likely to be resolved within weeks and Warsh and Powell are unlikely to disagree on interest rate policy.
Email Jesse Healy
