US Home Prices Grew at Slowest Pace Since August 2023: Report

Some parts of the United States have now become ‘fully fledged buyer’s markets,’ an economist says.

A house awaits buyers in Irvine, Calif., on Sept. 21, 2020. John Fredricks/The Epoch Times

The pace of American homes increasing in price was the slowest in 18 months, which together with a recent decline in mortgage rates brought more buyers into the housing market, according to real estate brokerage Redfin.

Home prices in February “were up 5.1 percent on a year-over-year basis—the slowest pace since August 2023,” the company said in a March 18 report. Month-wise, prices went up 0.4 percent in February on a seasonally adjusted basis, equal to the slowest pace since July 2024.

The easing in home price growth came as the weekly average rate for a 30-year fixed-rate mortgage fell slightly last month, moving down from 6.95 percent for the week ending Jan. 29 to 6.76 percent for the week ending Feb. 26.

Redfin Senior Economist Sheharyar Bokhari said home price growth on an annual basis has slowed down for 10 straight months, dropping from 7.5 percent in April last year to 5.1 percent in February.

Bokhari sees the slowing price growth and recent mortgage rate decline as “good news” for both buyers and sellers entering the spring homebuying season. The development is bringing “more home hunters off the sidelines—an encouraging sign for potential sellers.”

“At the same time, some areas of the country have turned into fully fledged buyer’s markets, where homes are sitting longer and people are able to negotiate a good deal under the list price.”

“That’s particularly the case in several Florida and Texas markets where the number of homes on the market has ballooned and prices are now starting to fall.”

In fact, the largest annual price decline in 50 of the most populous U.S. metro areas was seen in Tampa, Florida. This was followed by Austin and Fort Worth in Texas.

Sam Khater, the chief economist at Freddie Mac, said that current mortgage rates continue to remain relatively lower compared with the past few months.

Buyers have “responded” to the situation, with mortgage applications to purchase a home rising by 5 percent year-over-year.

“The combination of modestly lower mortgage rates and improving inventory is a positive sign for homebuyers in this critical spring homebuying season,” he said.

However, mortgage rates may not fall much this year, according to Fannie Mae. Also, a survey from the company showed that consumer housing sentiment was down on an annual basis last month for the first time since 2023.

A key reason for the negative sentiment was higher pessimism among respondents about mortgage rates. The percentage of respondents expecting rates to fall in the next 12 months declined from 35 to 30 percent. In contrast, the share of those who see rates climbing rose from 32 to 33 percent.

Rates and Builder Sentiment

Mark Palim, Fannie Mae senior vice president, said pessimism made sense given rates hovering around 7 percent, and with many people worried about their financial situation.

“While some consumers may be slowly acclimating to the higher mortgage rate environment, the vast majority continue to believe it is a ‘bad time’ to buy a home—with high home prices cited as the primary sticking point,” Palim said.

The U.S. Federal Reserve kept benchmark interest rates unchanged in its recent meeting on March 18-19, the second consecutive time rates have been left steady. Unless interest rates drop, mortgage rates may not move down by any large measure.

Meanwhile, home builders are facing challenges. Builder sentiment in the market for newly built, single-family homes declined in March, hitting the “lowest level in seven months,” according to a March 17 statement from the National Association of Home Builders (NAHB).

“Builders continue to face elevated building material costs that are exacerbated by tariff issues, as well as other supply-side challenges that include labor and lot shortages,” said NAHB Chairman Buddy Hughes.

During testimony to Congress earlier this month, Hughes said that construction costs are up 34 percent since December 2020, pushing up home prices. In addition, the sector is facing a labor shortage, with over 200,000 positions left unfilled.

NAHB Chief Economist Robert Dietz said builders are estimating recently announced tariffs to add $9,200 per home in costs.

On the plus side, “builders are starting to see relief on the regulatory front to bend the rising cost curve,” Hughes said.

During his testimony, he called on Congress to support construction workforce development programs, control excessive regulatory costs, improve the supply of lumber, and strengthen programs such as the Low-Income Housing Tax Credit.