The milestone comes as 7% mortgage rates sideline buyers, and sellers are forced to lower their asking price to accommodate high rates. The typical U.S. home sold for $350,246 during the four weeks ending February 26, down 0.6% year over year, marking the first time prices have dropped since February 2012 (except the prior four-week period; Redfin’s revised weekly data shows a 0.3% drop for the four weeks ending February 19).

But that doesn’t mean homes are more affordable. The typical monthly mortgage payment for today’s homebuyer is at a record high of $2,520, due to elevated mortgage rates. That could lead to a prolonged winter for the housing market. Many homebuyers and sellers are likely to wait at least until the summer, when rates may dip, to jump into the market.

“Prices falling from a year ago is a milestone because it hasn’t happened since the housing market was recovering from the 2008 subprime mortgage crisis. But it’s not surprising and in many ways, it’s welcome,” said Redfin Deputy Chief Economist Taylor Marr. “Home prices skyrocketed so much over the last few years that they were likely to come down once rates rose from historic lows. Mortgage rates rising to the 7% range was the straw that broke the camel’s back, dampening homebuying demand and leading to sellers asking less for their home.”

“Prices will probably decline a bit more in the coming months, but first-time buyers hoping to score a major deal this year are likely out of luck,” Marr continued. “That’s because so few homeowners are listing their homes for sale. Limited inventory and continued interest in turnkey homes in desirable neighborhoods will keep prices somewhat propped up–and high rates will continue to be a hit on affordability.”

Although homebuying demand is down from last year, it’s still up from last fall’s low point. Redfin’s Homebuyer Demand Index—a measure of requests for home tours and other services from Redfin agents—hit its highest level since September; online searches of homes for sale are also up significantly from their trough. Pending home sales posted their smallest decline since July. But mortgage-purchase applications have declined to their lowest level since the 1990s.

Leading indicators of homebuying activity:

• For the week ending March 2, average 30-year fixed mortgage rates rose to 6.65%, marking the fourth straight week of increases. The daily average was 7.1% on March 2.
• Mortgage-purchase applications during the week ending February 24 declined 6% from a week earlier, seasonally adjusted, reaching their lowest level since the early 1990s. Purchase applications were down 44% from a year earlier.
• The seasonally adjusted Redfin Homebuyer Demand Index hit its highest level since September. It was up 1% from a week earlier and 3% from a month earlier during the week ending February 26. It was down 24% from a year earlier.
• Google searches for “homes for sale” were up about 44% from the trough they hit in December during the week ending February 25, but down about 18% from a year earlier.
• Touring activity as of February 26 was up 12.1% from the start of the year, compared with a 14.4% increase at the same time last year, according to home tour technology company ShowingTime.

Key housing market takeaways for 400+ U.S. metro areas:

Unless otherwise noted, this data covers the four-week period ending February 26. Redfin’s weekly housing market data goes back through 2015.

• The median home sale price was $350,246, down 0.6% from a year earlier, the first decline on record. Redfin’s monthly dataset, which goes back through 2012, shows that the last time home prices declined annually was February 2012, when they dropped 1.5%.
• Median sale prices fell in roughly half (24) of the 50 most populous U.S. metros, with the biggest drops in pandemic homebuying hotspots and northern California. Austin (-11% YoY) saw the biggest dip, followed by San Jose, CA (-10.9%), Oakland, CA (-10.4%), Sacramento (-7.7%) and Phoenix (-7.3%). That’s the biggest sale-price drop on record for each of those metros except San Jose.
• Sale prices increased most in West Palm Beach (+15% YoY), Milwaukee (13.2%), Columbus, OH (9.5%), Miami (9.1%) and Fort Lauderdale, FL (7.8%).
• The median asking price of newly listed homes was $382,225, up 0.6% year over year, the smallest increase since April 2020.
• The monthly mortgage payment on the median-asking-price home was $2,520 at a 6.65% mortgage rate, the current weekly average. That’s an all-time high. Monthly mortgage payments are up 28% ($556) from a year ago.
• Pending home sales were down 15% year over year, the smallest decline since July.
• Pending home sales fell in all 50 of the most populous U.S. metros. They fell most in Las Vegas (-55.2% YoY), Austin (-49.5%), Portland, OR (-46.9%), Riverside, CA (-45.4%) and Nashville (-45.3%).
• New listings of homes for sale fell 20.3% year over year. New listings declined in all 50 of the most populous U.S. metros, with the biggest declines in Oakland, CA (-45.1% YoY), Sacramento (-42.6%), Seattle (-42%), San Jose, CA (-41.6%) and Portland, OR (-41.6%).

• Active listings (the number of homes listed for sale at any point during the period) were up 19.6% from a year earlier, the smallest increase in more than two months.
• Months of supply—a measure of the balance between supply and demand, calculated by the number of months it would take for the current inventory to sell at the current sales pace—was 3.5 months, down from 4.4 months a month earlier and up from 2.1 months a year earlier.
• 45% of homes that went under contract had an accepted offer within the first two weeks on the market, the highest level since June, but down from 53% a year earlier.
• Homes that sold were on the market for a median of 50 days. That’s up from 31 days a year earlier and the record low of 18 days set in May.
• 22% of homes sold above their final list price, down from 43% a year earlier.
• On average, 4.9% of homes for sale each week had a price drop, up from 1.9% a year earlier.
• The average sale-to-list price ratio, which measures how close homes are selling to their final asking prices, was 98%, the highest level in two months but down from 100.6% a year earlier.

View the full report, including charts, here.