The year-over-year median home sale price dropped in January for the first time since February 2012 in metro Portland, according to new numbers from the Regional Multiple Listing Service.

The month’s median sale price of $384,900 represented a 1.3 percent decline from a year earlier. While home prices typically drop in the winter, it’s been nearly seven years since they fell on an annualized basis.

“The aggressive price increase we saw in the past few years simply became unsustainable as too many potential homeowners were priced out of the market,” said Tim Duy, a University of Oregon economist. “Prices just became too high.”

Mortgage rates also spiked in the waning months of 2018, which further curbed buying power. And the end of the year also brought a great deal of economic uncertainty, including a tumbling stock market and the shutdown of parts of the federal government.

The red-hot housing market of two years ago — which saw prices climbing by 10 percent annually — has cooled dramatically. Home price gains have been slowing since 2017, and sales have slowed, too. The listing service said 1,451 homes were sold in January, a 10.9 percent decline from a year earlier.

And recently homes on the market have been stacking up. There were more than 4,700 homes for sale in January, representing a 3.3-month supply. Though that’s a slim inventory by historic standards and suggests a seller’s market, it’s the highest observed in Portland since 2015.

Sellers are feeling their power erode, with homes sitting on the market longer and more of them selling for less than the listed price. The typical home sold in January was on the market for 76 days, from listing to the day an offer is accepted.

The real estate brokerage Redfin reported a dramatic decline in bidding wars over houses over past year. Its brokers faced competing bids for 19 percent of their homebuyer clients’ offers in January, a decline from 53 percent at the same time last year. (Despite the decline, Portland remained one of the most competitive markets by that metric.)

Daryl Fairweather, the real estate company’s chief economist, said buyers backed off as homes got too unaffordable, and prices dropped as a result.

“That’s good, because that means buyers might come back to the table, and they’ll have more homes that are affordable to them,” she said.

New listings continued to hit the market in January, suggesting homesellers haven’t lost faith. (Most have gained tens of thousands of dollars in equity in recent years from price appreciation alone, even with January’s decline.)

Duy said the price decline is surprising but likely reflects a flattening of price gains rather than a market reversal.

“We forget how abnormal this market had gotten,” Duy said. “You got very, very low inventory for a couple of years, and it wasn’t the same conditions driving the housing boom of the last decade. There is much more real money flowing in.”

And unlike the 2008 financial crisis, price declines are unlikely to send the market spiraling into a morass of defaults and foreclosures, Duy said. Most homeowners have a significant amount of equity in their home, and loan qualifications are far more strict.

The report covers the Oregon side of the metro area, including Multnomah, Washington, Clackamas, Columbia and Yamhill counties.

-- Elliot Njus

enjus@oregonian.com; 503-294-5034; @enjus

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