American homeowners lost $45.3 trillion at the close of 2022, down $2.3 trillion from a record high of $47.7 trillion in June, a new report from Redfin online brokerage shows.
The number represents the largest June-to-December drop in percentage since 2008.
Total home value was up 6.5% from the previous December, but it is the smallest year-over-year increase during any month since August 2020, according to Redfin.
Demand for homes has decreased, thereby lowering their value from their peak. In January, the median U.S. home sale price was $383,249, down 11.5% from a peak of $433,133 in May, and up just 1.5% from January 2022, according to the study.
The demand was fueled largely because of rising mortgage rates that were a result of the Federal Reserve's attempts to fight inflation.
"The housing market has shed some of its value, but most homeowners will still reap big rewards from the pandemic housing boom," said Redfin Economics Research Lead Chen Zhao. "The total value of U.S. homes remains roughly $13 trillion higher than it was in February 2020, the month before the coronavirus was declared a pandemic."
However, Zhao added, "a lot of people were left behind. Many Americans couldn't afford to buy homes even when mortgage rates hit rock bottom in 2021, which means they missed out on a significant wealth-building opportunity."
Meanwhile, the average long-term U.S. mortgage rate jumped this week to its highest level since November.
Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate rose to 6.5% from 6.32% last week. The average rate a year ago was 3.89%.
Higher rates can add hundreds of a dollars a month in costs for homebuyers, on top of already high home prices.
The rate for a 15-year mortgage, popular with those refinancing their homes, climbed this week to 5.76% from 5.51% last week. It was 3.14% one year ago.
The Associated Press contributed.
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