Rising Interest Rates... US May Home Prices Fall by Largest Margin in 11.5 Years

As pressure from mortgage interest rates continues, U.S. home prices fell last month at the fastest pace in 11 and a half years.

According to the National Association of Realtors (NAR) on the 22nd (local time), the median price of existing homes in May was $396,100 (approximately 515 million KRW), down 3.1% compared to the same period last year. This is the largest decline since December 2011. By region, home prices dropped significantly in the Western U.S., while the Eastern region continued to show an upward trend. However, U.S. home prices have continued to rise slightly for three consecutive months compared to the previous month.

[Image source=EPA Yonhap News]

The number of existing home sales in May recorded 4.3 million units (annualized). This is a 0.2% increase from the previous month, slightly exceeding the expert forecast of 4.25 million units compiled by The Wall Street Journal (WSJ). However, compared to one year ago, it decreased by 20.4%.

Existing home sales have dropped by about one-third compared to early 2022, due to the combination of high home prices and the impact of rising mortgage rates. According to the U.S. government-sponsored mortgage company Freddie Mac, the average 30-year fixed mortgage rate last week was 6.69%. Although lower than last fall’s peak above 7%, which was the highest in 20 years, it remains at a high level.

WSJ reported, "The housing market downturn is a representative example of how the Federal Reserve’s measures to curb inflation through interest rate hikes are affecting consumers." According to Redfin, compared to one year ago, the median home prices in May fell the most in Austin, Texas (-15.1%), Boise, Idaho (-14.3%), and Oakland, California (-11.2%), while they rose the most in Hartford, Connecticut (+10%), Rochester, New York (+9.7%), and Cincinnati (+9.3%).

This content was produced with the assistance of AI translation services.