The fall eclipsed even the 23.2 percent decrease recorded at the height of the Wuhan coronavirus (COVID-19) pandemic in 2020.
Major reasons for the slowdown include recession fears and rising interest rates, which have priced some buyers out of the market.
"We're dealing with inflation, and inflation cuts into profits," said Daryl Fairweather, Redfin's chief economist. "Rich people definitely care about how much profits the companies they are invested in are making. That affects stock prices, it affects treasury yields."
She also said high-end-house hunters are getting sticker shock when they see the impact of rising mortgage rates on paper. "For a luxury buyer, a higher interest rate can equate to a monthly housing bill that is thousands of dollars more expensive," she added.
Naturally, luxury goods are often the first thing to get cut when uncertain times force people to re-examine their finances.
This is exactly what happened to business professor Nancy Lam who upgraded in January to a house nearer her child's school in the San Francisco Bay Area. She listed her five-bedroom modern home in the sought-after suburb of Lafayette for $3.95 million in May.
It took them time sprucing up the house, which they bought for $1.67 million in 2014. But soon after, they realized they may have miscalculated as the house hadn't been scooped up as they expected for weeks, with no reasonable offers or bidding wars. After four months and two significant cuts, the property is still on the market for $3.49 million.
"We never expected for this to still be on the market. It really caught us by surprise," Lam said.
Her real estate agent Herman Chan of Golden Gate Sotheby's International Realty said, six months ago, people were buying homes over-ask and with no appraisal. "Now, it's like crickets," he said.
Sales of non-luxury homes also fell during the same period, but the 19.5 percent drop was smaller than the decline in the luxury market – which is defined as the top five percent of homes based on estimated market value, according to Redfin.
The National Association of Realtors (NAR) reported that existing home sales fell once again to 4.80 million and the declining trend was due to higher mortgage rates and home prices. (Related: New single-family home sales plunge to 6 1/2 year low as mortgage rates and housing prices continue to rise.)
"The savagely unhealthy housing market theme of mine is running in full force now as we have gotten no relief on home prices and now have a mega jump in mortgage rates," housing data analyst and financial writer Logan Mohtashami wrote for Housing Wire.
"With the home-price growth we had in 2020 and 2021, the five-year price-growth model that I set for 2020-2024 of 23 percent was already smashed in just two years. That was a huge red flag, hence all the statements in 2021 about unhealthy housing."
He added that the secondary negative impact was going to be more painful.
"Since the summer of 2020, I have talked about what could change the housing market, which was a 10-year yield above 1.94 percent, which means rates over four percent. Now that mortgage rates are over six percent, this one-two punch of rising prices and rising rates is the core basis of the savagely unhealthy housing market," Mohtashami pointed out.
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Watch the below video that talks about central banks admitting they caused the housing bubble on purpose.
This video is from the Zoon Politikon channel on Brighteon.com.