Published by REALTOR.com | January 12, 2023
December brought good tidings to homebuyers in the real estate market.
Nationally, median home list prices dropped about 11% from their peak over the summer to hit $400,000 in December, according to a recent Realtor.com® report. While prices were still up by about 8.4% year over year in December, this was the first time in a year that they rose by only single digits.
In another gift for home shoppers, the number of properties for sale nationally shot up more than 50% compared with a year ago. And homes are sitting on the market for longer, giving buyers an opportunity to think about whether this is the right home for them instead of having to put in an offer on the spot.
Mortgage interest rates even dipped from over 7% to the 6% range last month. Rising rates were responsible for cooling off the housing market, as many buyers couldn’t afford the higher monthly payments on a home after rates more than doubled over the course of 2022.
“Prices are moderating. Mortgage rates came down. And there are more homes for sale,” says Realtor.com Chief Economist Danielle Hale. “It’s a continuation of what we’ve been seeing.”
Higher mortgage rates put a stop to the whiplash-inducing price increases and manic bidding wars that defined the COVID-19-era real estate market. Back when rates were in the 2% and 3% range, many buyers could afford the higher home prices because their monthly mortgage payments were low. But when rates spiked, so did mortgage payments—and those higher prices suddenly became unmanageable for many buyers.