House prices fall by the biggest amount in 11 years as mortgage rates rise

• The median home price in the U.S. fell nearly 2% year-over-year in April, the National Association of Realtors said.
• It is the sharpest fall since January 201[ads1]2.
• The decline in the housing market comes as high mortgage interest rates push potential buyers away.

House prices in the US just recorded their biggest annual drop in over 11 years, with sky-high mortgage rates leading to a decline.

The national median price for existing homes fell 1.7% to $388,800 last month, according to data from the National Association of Realtors — the metric’s biggest year-over-year drop since January 2012.

Median prices have now fallen 6% from their peak of $413,800 last June.

The decline comes amid a rapid rise in mortgage rates, with the average 30-year fixed-rate mortgage climbing from 5.25% to 6.35% in the past year, according to data from Freddie Mac.

That has likely weighed on demand by making homes less affordable for most buyers, discouraging people locked into lower mortgage rates from selling their houses.

Mortgages have become more expensive over the past year due to the Federal Reserve’s aggressive rate hikes.

The central bank has lifted benchmark borrowing costs from near zero to over 5% over the past year in an effort to bring down skyrocketing rates – and although inflation appears to be cooling and nearing the Fed’s 2% target, certain stocks are being weighed heavily, as well bonds and housing.

There was also a sharp drop in sales activity alongside the decline in prices, with total completed transactions for existing homes falling 3.4% between March and April and over 23% year-on-year.

The decline was particularly marked in the western half of the US, with prices still rising in much of the east.

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