U.S. home prices rose 1.7 percent year over year in March, the slowest annual growth rate in records dating to 2012, according to the Redfin Home Price Index (RHPI).
Month over month, prices climbed 0.1 percent on a seasonally adjusted basis, the third consecutive month of the same gain, as high mortgage rates and economic uncertainty kept buyer demand in check, Redfin said.
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“Price growth is losing steam, with the slowest annual gains we’ve seen in a decade,” said Chen Zhao, Redfin’s head of economics research. “High mortgage rates and global uncertainty are causing some would-be buyers to back off, which is putting a lid on home prices.”
Buyer’s markets expand
Chen Zhao
The pullback in demand has shifted negotiating leverage across much of the country. Buyers held the upper hand in 38 of the most populous metro areas in March, up from 29 a year earlier, according to a separate Redfin market analysis.
Nationally, sellers outnumber buyers by 43 percent, near the largest gap in records dating to 2013, but buyers in the market have gained bargaining power as a result.
Texas leads declines, San Francisco surges
Home prices fell in 13 major metros on a seasonally adjusted, month-over-month basis in March. The steepest declines were in Fort Worth, Texas, down 0.8 percent, and Austin, Texas, down 0.7 percent, followed by Nashville and Oakland, each down 0.6 percent.
On a year-over-year basis, the largest drops were in San Antonio, Texas, down 4.1 percent, Jacksonville, Florida, down 3.5 percent, and Austin, Texas, down 3 percent.
San Francisco posted the largest monthly gain at 1.2 percent and the largest annual gain at 13 percent, which Redfin attributed to the local AI boom. Pittsburgh led all analyzed metros in monthly gains at 2.8 percent.
Why prices aren’t falling despite soft demand
Prices have continued to rise rather than fall because new listings are declining, Redfin noted. Some homeowners are opting to stay put rather than list in a soft market, limiting supply and providing a floor under prices.
Mortgage rates climbed from 6 percent to 6.4 percent in March, driven in part by the Iran war pushing oil prices higher and unsettling financial markets, according to Redfin economists. Zhao said the slowdown “may ultimately bring homebuying costs down enough to bring some house hunters back.”
For sellers: Late April is the sweet spot
Despite the broader slowdown, late April remains the best time nationally to list a home, according to a Redfin and Home Economics analysis. Homes listed during that period have the highest likelihood of selling at or above asking price and moving at pace. Timing varies by region; March tends to be strongest on the West Coast and May on the East Coast.
What to watch
Federal Reserve chair nominee Kevin Warsh faces a Senate confirmation hearing on Tuesday. Betting markets put the probability of his confirmation before May 15, when current chair Jerome Powell’s term ends, at 36 percent, according to Redfin economists.
An unresolved succession could introduce rate volatility in the near term, though Redfin noted the standoff is likely to resolve within weeks and that Warsh and Powell are unlikely to diverge on rate policy.
