In this year’s first quarter, home prices fell in 31 percent of the 221 metro areas monitored by the National Association of Realtors (NAR).

Prices have not fallen so broadly in more than a decade, according to the NAR. 

Prices in the western U.S., particularly California, were hit the hardest. In San Francisco, the median sale price was 14.5 percent below that of a year earlier; San Jose, in the heart of Silicon Valley, posted a 13.7-percent decline.

So-named “Zoomtowns” that boomed during the shift to remote work also took a hit. Median prices in Austin, TX, and Boise, ID, were off at least 10 percent.

Prices rose by more than 10 percent in 7 percent of the 221 metro areas, compared to 18 percent in the last quarter of 2022.

Nationally, prices were 0.2 percent lower, year on year, slipping to a median sale price of $371,200, marking the first year-over-year quarterly price decline since the first quarter of 2012, the NAR noted.

Median sale prices nationally have slipped as interest rates have risen, squelching demand to a degree. 

However, the lack of available houses for sale has helped keep prices from sliding further.

“Generally speaking, prices are lower in expensive markets and higher in affordable markets,” NAR chief economist Lawrence Yun said in a statement, adding that the shortage of houses for sale could halt price declines soon.

TRENDPOST: As we have noted in articles such as “Potential Homebuyers Still Find Too Few Houses For Sale” in this issue, homeowners have been reluctant to sell as interest rates rise: a new mortgage on their new home would probably be vastly more expensive than their old one.

If the Fed holds its rates steady, more houses would likely come up for sale. The backlog of eager buyers could then rush into the market, bidding up prices again.

At the same time, an increase in demand would encourage lenders not to lower mortgage interest rates.

Because buying a home triggers a range of other purchases—appliances and furniture, the services of painters and carpenters, and so on—a resurgent housing market could spike inflation once again.

While the Fed should weigh these considerations at its next meeting on 13 June, in light of the fact that they were either too stupid to admit inflation was rising for two years—or were lying about it because they wanted to keep pumping up the equity markets—they will deny the economic fundamentals and keep raising interest rates.