Despite a cooling housing market, high prices will continue to pose challenges for buyers, according to realtor.com.
The housing slowdown that has given hope to price-squeezed buyers, struck fear into the hearts of sellers, and captivated real estate aficionados from coast to coast appears to have taken a break. Home list prices aren't coming down, it seems—instead they reached a new all-time high as the busy spring market begins.
That's significantly more than inflation, which was just 1.5% in February.
"In a slowing market, it's not uncommon to have a gap between list prices and sale prices. It can take sellers a little bit of time to catch up to the reality," Hale says.
The softening in the market began over the summer, when wild price acceleration of the past several years began slowing down. That was due to a rise in inventory as more sellers trying to capitalize on high prices rushed to list their properties—at the same time that many buyers took a pause when prices and mortgage rates simply got too high. The result? There were price cuts in some of the most expensive markets, and prices didn't climb quite as high as they did in previous years.
Overall, there was a 4% bump in the number of homes for sale in March. That should be a boon for buyers as the greater the supply, the more prices typically fall. But hold on, optimists: The number of affordable homes priced at $200,000 and below was down 9% annually. That's making it harder for first-time and other cash-strapped buyers to become homeowners.
One bright spot for the non-millionaire crowd is that mortgage rates fell to just 4.06% last week on 30-year, fixed-rate loans—giving buyers some much-needed financial relief. That's the lowest they've been since January of last year. It's also well under the nearly 5% mark they were hovering around in November.
So where are prices going down, rather than up? In the nation's most expensive market—Silicon Valley's San Jose, CA, metropolitan area—prices plummeted 12% in March compared with the previous year. But don't get too excited—homes still cost a median $1.1 million as of March 1, according to realtor.com data.
On the other end of the spectrum, Milwaukee saw the biggest jump as median home prices were up 16% year over year in March. That's likely due to the shortage of properties for sale as listings were down 8% annually. Median prices were $270,000 as of March 1.