House prices fell for the first time since 2012

House prices fell for the first time since 2012, the collapse of Silicon Valley Bank brought more buyers into the housing market.

Redfin said home prices fell in February year-on-year for the first time since 2012.

But March saw a shift in the market with the collapse of the Silicon Valley bank.

More homebuyers entered the market as mortgage rates fell.

Redfin reported on Friday that home prices fell year-on-year in February, the first time since 2012, but new demand in recent weeks may change those conditions.

The median home sale price fell 1.2% to $386,721 last month as continued Fed rate hikes sent mortgages higher, keeping buyers at bay and forcing sellers to lower their costs.

In February, 14.2% of homes for sale saw prices fall, more than double last year's rate of 5.7%, as the month saw mortgage rates rise nearly a full percentage point.

But this month's banking turmoil changed the outlook as the 30-year fixed mortgage peaked at 6.88% near the end of February and fell to 6.55% by Thursday.

"It is worth noting that the housing market turned around in March after the collapse of Silicon Valley," Redwine said in its report. "Ongoing turmoil in the banking sector has lowered the prospect of the Federal Reserve raising interest rates much more this year. That has pushed down mortgage rates, bringing more homebuyers back into the market."

According to the Mortgage Bankers Association, total US mortgage applications rose 6.5% last week alone.

Meanwhile, markets still expect the Federal Reserve to increase interest rates by 25 basis points at next week's policy meeting. But then, they start pricing in a series of price cuts later this year.

This is because investors are anticipating that the central bank will ease the aggravating conditions that contributed to the collapse of the SVB and are currently putting other regional banks under pressure.

The National Association of Realtors came to a similar conclusion on mortgage rates and the banking crisis.

"We were expecting mortgage rates to fall into the lower 6% range sometime in the second half of 2023, but now we may see that level in the coming weeks," Nadia Evangelo, chief economist at NAR, told Insider.

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