An analysis by real estate company Zillow found that housing prices in the United States had dropped for the first time in a decade after skyrocketing in recent years and driving many out of the market for home ownership.
The report from the online company found that their Zillow Home Value index had fallen by 0.1% from June to July.
"The market is quickly rebalancing. With buyers' purchasing power diminished by nearly two years of double-digit price growth and higher mortgage rates, competition for homes is dropping off," the report said.
The fall in pricing came after a report from the National Association of Realtors said that housing sales had cratered 20% from the previous year in July, and 6% from the previous month.
Despite the small decline in pricing, the value of the typical home in the U.S. was 16% above its pricing from last year, or $357,107.
Experts say the sudden rise in real estate loan rates has priced many buyers out of the market and led to less demand for housing.
"This slowdown is about discouraged buyers pulling back after the affordability shock from higher rates. As prices soften, many will renew their interest, and we will continue our progress back to 'normal,'" said Zillow chief economist Skylar Olsen.
Zillow has also projected that U.S. home prices will increase from 2022 to 2023, but only by 2.4%, far less than they had previously predicted.
A separate analysis by Redfin found that some markets that had experienced a boom during the pandemic had seen a spike in home sellers dropping their prices. Among the worst was Boise, Idaho, and Tampa, Florida.
The Federal Reserve has raised the national baseline rate in an attempt to jolt the economy from spiking inflation from government overspending during the coronavirus pandemic. Fed Chairman Jerome Powell has indicated that they may continue to raise rates in order to prevent the economy from continuing to overheat.
"It is essential that we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all," said Powell in July.
Critics fear the move may shove the nation into a recession, especially since the gross domestic product has decreased in two consecutive quarters, the generally accepted definition of a recession.
Here's more about the changing housing market:
We're witnessing a housing recession: Economist www.youtube.com