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The rate at which home prices grow is slowing down.

U.S. home prices increased 0.6% from a month before in February, in line with the 0.6% average monthly gain in the roughly eight years leading up to the Covid-19 pandemic, according to a new Redfin analysis.

Before the pandemic, it was normal for prices to grow about half a percent every month, or to increase around 5% or 6% annually, said Daryl Fairweather, the chief economist at Redfin.

“We’re back to that trend, despite these higher mortgage rates,” she said.

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A similar trend appeared in Moody’s Analytics House Price Index, said Matthew Walsh, assistant director and economist at Moody’s Analytics.

“Home prices are appreciating at the same pace as before,” he said. “It’s returned to the trend that we saw pre-pandemic.”

However, the market today is vastly different from the market two to eight years ago, experts say. The average home is still unaffordable for most potential buyers while inventory has slightly improved but not enough to meet demand.

“The sentiment we’re getting from our agents is that neither sellers nor buyers are satisfied with this market,” Fairweather said. “Sellers are dissatisfied … with offers that they’re getting. And buyers are disappointed in rising prices and rising mortgage rates.”

Levels of transactions are at ‘recessionary lows’ 

While the housing market has stabilized in terms of price growth, a major difference between the market today and the pre-pandemic period is the relatively low number of transactions, which is largely due to high mortgage rates, said Fairweather. Mortgage rates peaked at nearly 8% last year, but are still over 6%, according to Freddie Mac data.

In fact, the level of transactions are at “recessionary lows” despite “a pop in the data in February,” Walsh said.

Another factor affecting sales is the extremely limited supply of homes, he added.

New listings climbed 5% during the last four weeks ended March 17, the biggest year-over-year jump since May 2023, Redfin found. But “it’s like a small recovery from a rock bottom,” said Fairweather.

“We’re not back to where we were pre-pandemic,” she said.

Supply growth is mostly tied to a seasonal trend, economists say. Owners often list their homes for sale in February because they prefer to move in the spring and summertime, Walsh said.

And sometimes, life happens. “Another factor is just people needing to move for either a new job or they’re getting married, or there’s some other big life event,” Fairweather said.

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