Today Analysis: What caused The Sharpest Decline in The US Housing Matket in 11 years?

The US housing market is currently experiencing significant challenges. In March 2023, home sales in the United States fell by 2.4% from the previous month, resulting in an overall decrease in sales for 13 out of 14 consecutive months. One of the primary causes of the decline in the housing market is the rise in mortgage rates. The increase has taken a toll on Americans' motivation to buy homes. The cooling of the US economy, along with the high inflation rate and the possibility of a recession in the next 12 months, has put many homebuyers on the edge. The collapse of Silicon Valley Bank and Signature Bank is also making a significant impact on the market.

The decline in the number of home sales is a negative sign for the peak home sales season. Spring is typically the period when most Americans buy homes. This is especially significant for families with young children who are looking to move before the new school year begins. However, the current state of the real estate market has left many discouraged about purchasing properties.

The slowdown in the US housing market is also putting pressure on house prices. For the first time in 11 years, house prices have fallen for two consecutive months. The western United States, which formerly experienced massive price increases, is now experiencing the largest decline in house prices. The median home price in the US is currently 9.2% lower than the record threshold of $413,800 per unit in June 2022.

The series of strong interest rate hikes by the Federal Reserve has had a significant influence on the real estate sector, which is an essential component of the economy. High housing costs also contribute to inflation. This has made real estate one of the most impacted sectors by high-interest rates.

The US housing market's current state is worrisome. The decline in home sales and the increase in mortgage rates have caused many Americans to hold back on purchasing properties. The decline in house prices and housing construction permits is a considerable strain on the market. It remains to be seen how the real estate market will be in the coming months. The Federal Reserve's action may have a significant effect on the housing market's recovery.