U.S. home prices record first monthly drop since September 2022

Investing.com -- In April, U.S. home prices experienced a slight decrease of 0.1% on a seasonally adjusted basis, marking the first month-over-month drop since September 2022, according to a recent report by real estate brokerage Redfin (NASDAQ:RDFN).

The report also revealed that home prices rose by 4.1% on a year-over-year basis, a decrease from the 4.9% growth witnessed in March. This is the slowest rate of annual price growth since July 2023.

These findings are based on the Redfin Home Price Index (RHPI), which uses the repeat-sales pricing method to calculate seasonally adjusted changes in prices of single-family homes. The RHPI tracks the sale prices of homes that sold during a given period and how those prices have changed since the last time those same homes sold.

This is only the third instance that the RHPI has recorded a month-over-month decline, with the previous instances occurring in August and September 2022, following a series of rapid interest rate increases. Although April’s decline is minor (-0.05%, rounded to -0.1%), it’s noteworthy that RHPI data is subject to revision.

Redfin Senior Economist Sheharyar Bokhari attributes the flat home prices to two key factors. Firstly, potential buyers are adopting a cautious approach due to the impact of U.S. tariff policies and the potential for a recession, which has led to a 3.5% month-over-month decrease in pending home sales in April. Secondly, the total number of homes for sale is at a five-year high, primarily because homes aren’t selling, leading sellers to offer concessions at near-record levels.

Despite the softening of prices, Bokhari noted that affordability remains a significant challenge for many buyers due to elevated mortgage rates and high prices, causing many to stretch their budgets to make a purchase.

The report also highlighted that prices fell in 25 of the 50 most populous metro areas in April, on a seasonally adjusted basis. The largest decline was recorded in Charlotte, NC (-1%), Virginia Beach, VA (-1%), and Miami (-0.7%). Conversely, Nassau County, NY (1.8%), Warren, MI (1.3%), and New York (1.2%) saw the most significant price increases.

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