PORTLAND, Ore. (KOIN) – The Portland housing market is experiencing its steepest home sale price drop in years. The average sale price in the market has been declining since July 2022.
The Regional Multiple Listing Service released its latest Market Action Report for the Portland Metro area Tuesday.
According to the report, the average sale price for a Portland-area home in December 2022 was $566,700 and the median sale price was $507,500. Both are the lowest they’ve been since April 2021.
Portland home sale prices had been steadily increasing since March 2020, when the COVID-19 pandemic began.
They continued to climb until May 2022, when the RMLS Market Action Report said the average sale price in the Portland area was $649,600 and the median sale price was $575,000. After that, prices started to slide.
The decline came shortly after the Federal Reserve hiked interest rates in March 2022. The Fed made several more increases to interest rates throughout the year, finishing with a final increase on Dec. 14. This final increase raised interest rates to their highest level in 15 years.
According to CBS News, mortgage rates rose in tandem with the Fed’s rate hikes and eventually topped 7% for a traditional 30-year loan. That rate more than doubled what it was in January 2022.
The higher rates made purchasing a home less affordable for some and helped drive down the demand. Forecasters predict there will be a continued slowdown in housing sales in 2023, even as home prices drop.
In Portland, the housing inventory remains above 2 months, at 2.3, which is higher than it was for all of 2021 and the first half of 2022. The number indicates that if no other houses were listed for sale, the number of available houses would sell within 2.3 months.
While prices are decreasing, new listings and closed sales continue to decline.
New listings decreased 35.6% from those listed in November 2022 and closed sales decreased 9.7% from November.
According to the RMLS, home sales are following a similar pattern in Southwest Washington and prices have been declining for months.