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Spokane, Washington  Est. May 19, 1883
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U.S. housing cools further, with prices down 2.7% from peak

Feb. 28, 2023 Updated Tue., Feb. 28, 2023 at 8:14 p.m.

Homes and condominiums are seen in a Lennar Corp. development in San Diego in September 2020.  (Bing Guan/Bloomberg)
Homes and condominiums are seen in a Lennar Corp. development in San Diego in September 2020. (Bing Guan/Bloomberg)
Staff and wire reports Bloomberg

Staff and wire reports

Home prices in the U.S. declined for a sixth straight month, sending a key index of values down 2.7% from its peak in June.

Prices nationally fell 0.3% in December from the month before, according to seasonally adjusted data from S&P CoreLogic Case-Shiller.

But in the Spokane area, home sellers currently are getting about 98.7% of their listing price, said Tom Hormel, president of the Spokane Association of Realtors.

“Buyers aren’t coming in and getting a 10% or a 20% drop in price,” he said. “They are selling right around what they are listing at.”

Spokane County is averaging about 75 homes sold a week, or about 300 a month.

“That’s a pretty decent clip,” Hormel said. “If we took out the last two years, people would be excited about that.”

Nationally, buyers pulled back from the market toward the end of 2022, slammed by mortgage rates that had more than doubled since that January.

Affordability already had been stretched by prices that soared to record highs throughout the first two years of the pandemic. As the boom fizzled and sales declined, the total value of U.S. homes tumbled by $2.3 billion in the second half of the year, according to a report last week by Redfin.

With competition easing, home shoppers who were determined to seal a deal gained a little leverage in negotiations with sellers.

Prices in December were still higher than they were a year earlier, but the pace of gains has cooled. The national index, not seasonally adjusted, was up 5.8% annually, down from the 7.6% gain in November.

Not all areas saw year-over-year increases. Prices fell 4.2% from December 2021 in San Francisco, and 1.8% in Seattle.

Slightly lower mortgage rates at the start of the year gave buyers some incentive. Contracts to purchase previously owned U.S. homes rose 8.1% in January from December, the biggest jump since June 2020, the National Association of Realtors reported Monday.

But the path ahead for housing may be bumpy heading into the key spring selling season. Borrowing costs have climbed through February, and the Federal Reserve has signaled it’s inclined to continue hiking its benchmark rate to battle inflation.

That’s likely to keep a lid on demand from would-be buyers and discourage current owners with low-rate mortgages from listing their properties.

At the same time, homes that are on the market have been lingering longer, which may push sellers to resort to deeper discounts.

“The prospect of stable, or higher, interest rates means that mortgage financing remains a head wind for home prices, while economic weakness, including the possibility of a recession, may also constrain potential buyers,” Craig Lazzara, managing director at S&P Dow Jones Indices, said in a statement Tuesday.

“Given these prospects for a challenging macroeconomic environment, home prices may well continue to weaken.”

Spokesman-Review staff writer Thomas Clouse contributed to this Bloomberg report.

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