Challenging Affordability Curbs Summer Home Sales
In a recent report, the National Association of REALTORS® (NAR) revealed that affordability concerns have cast a shadow over this summer’s real estate market, resulting in a 3.3% month-over-month decline in existing home sales across the United States.
Rising mortgage rates hitting 7% in recent months have caused many potential homebuyers to temporarily pause their property acquisition plans. The allure of historically low mortgage rates from a few years ago has deterred many existing homeowners from listing their properties for fear of forfeiting those advantageous loan terms.
The impact of these challenges is evident in the numbers. Pending sales fell by nearly 9% compared to July 2022, totaling just 1,052 for the month. Closed sales experienced a dramatic dip, falling by 26% compared to last year, to 860 monthly transactions.
Inventory of homes for sale has declined compared to the previous year, reporting at 1721 units – a 28.5% decline over July 2022. Greater Capital Association of REALTORS® CEO Laura Burns commented on the market logjam. “We know movement in the region’s current market challenges will come from an increase in inventory but with new construction adding only 91 homes at a median sale price of $572,326, inventory relief won’t come from new builds or existing homes with sellers choosing to stay put and wait out Buyers’ reaction to the Fed’s latest increase in interest rates”.
As a result of the less than 2 month’s inventory, prices continued to climb compared to last year. Despite the higher interest rates, the median sales price increased 5 percent to $300,000. Sellers, on average, received 102% of the original list price, representing only a slight decrease (6%) from last year. The scarcity of available homes has ignited fierce competition among buyers, particularly in more affordable markets, where the competition for properties remains exceptionally robust.