The median price of a US home was lower in February 2023 than in February 2022, ending more than a decade of year-over-year increases.

The median existing home price of $363,000 is down 0.2% from a year ago. Prices fell furthest in the West (5.6%) and Northeast (4.5%), where housing is generally more expensive.

Amid the shrinking prices, existing home sales surged by 14.5% in February, ending a 12-month streak of declines.

Low inventory and strong demand has kept prices strong in many places. Unsold inventory sits at a 2.6-month supply at the current sales pace, down 10.3% from January but up from 1.7 months a year ago. But the dwindling buyer pool makes selling more challenging.

With mortgage rates still elevated, the spring 2023 market is expected to be much more subdued than the booming years of the pandemic. However, the upward trajectory in rates has been interrupted several times throughout the year, including a few unexpected bank failures in mid-March.

The surprising sales jump indicates how sensitive some homebuyers have become to mortgage rates. As soon as rates dip, for whatever reason, consumers are quick to take advantage.

After the Fed’s most recent 0.25% hike, the current fed funds rate range is now 4..75% to 5%, and some policymakers have suggested it might rise to anywhere from 5% to 7% in 2023. As is typical, the cost of other consumer loans, including mortgages, have followed upward.

Some critics worry more hikes by the Fed could send the whole economy into recession, causing more harm than inflation. The 2023 housing market could become a “nobody’s-market,” not friendly to buyers nor sellers, as high costs keep affordability front-and-center.

On Nov. 29, the Federal Housing Finance Agency announced the 2023 conforming loan limit (CLL) for mortgages bought by Fannie Mae and Freddie Mac will increase to $726,200 in most of the United States to adjust for rising prices. In “high-cost areas” the limit is $1,089,300.

The Housing Policy Council (HPC), a mortgage industry trade association, responded: Significant increases to the CLL are worsening the affordability crisis. The HPC urged Congress to address the growing dominance of government backing in U.S. housing finance.