Home Prices Fell in Third of the U.S. During First Quarter

Home prices fell in more parts of the U.S. than they have in over a decade during the first quarter, when nearly a third of metro areas posted annual price declines, the National Association of Realtors said Tuesday.

During the peak of the housing boom, home prices surged in practically every corner of the U.S. Now, the housing market is split down the middle of the country, with prices still rising in many parts of the Midwest, South and Northeast while sliding in Western states.

The hardest-hit housing markets were concentrated in California and the Mountain West. San Francisco posted a 14.5% median single-family existing-home sale-price decline compared with a year earlier, and San Jose median prices fell 13.7%. Pandemic boomtowns Austin, Texas, and Boise, Idaho, also posted price declines of more than 10%.

Home sales have fallen nationwide over the past year because higher mortgage rates have weighed on home-buying demand and supply has been limited. The effect on home prices has been mixed, but the number of places where prices are falling has risen. Prices declined on an annual basis in 31% of the 221 metro areas tracked by NAR, the highest percentage in 11 years.

“Generally speaking, home prices are lower in expensive markets and higher in affordable markets,” said Lawrence Yun, NAR’s chief economist. But given the inventory shortage, price declines could be short-lived, he said.

Western markets that were already expensive or where prices climbed the most during the pandemic-driven housing boom are now the ones where prices are falling the fastest. In much of the rest of the U.S., limited inventory continues to drive prices higher.

Nationwide, the median single-family existing-home sale price fell 0.2% in the first quarter from a year earlier to $371,200, the first year-over-year price decline since the first quarter of 2012, NAR said.

First-time home buyers Kris Vierhaus and Travis Carter viewed a three-bedroom home in San Mateo, Calif., in December but thought it was overpriced. In February, when the house was still on the market, they put in an offer and bought it for about 4% under the listing price.

“By the time we closed, it was confirmed that people were going to get asking [price] or below,” Ms. Vierhaus said. “The aggressive offers, or the fighting over things, was just not happening anymore.”

Median prices rose by more than 10% from a year earlier in 7% of the 221 metro areas, a deceleration from the fourth quarter, when 18% of metro areas reported double-digit-percentage growth, NAR said.

In the first quarter, the typical monthly mortgage payment for a single-family home rose to $1,859, a 33% increase from $1,397 a year earlier, NAR said.

The Kingsport, Tenn., metro area posted the strongest median-price increase in the first quarter, up 18.9% from a year earlier, according to NAR. Following Kingsport was the Oshkosh, Wis., metro area, up 16.5%, and Warner Robins, Ga., up 16.2%.

News Corp, owner of the Journal, also operates Realtor.com under license from NAR.

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