HOUSING WATCH

Limited Inventory Puts Upward Pressure on Home Prices

Rising mortgage rates have affected home sales and prices in Salt Lake County. Despite this, limited housing inventory has caused prices to rise again. In December 2022, home prices hit a low of $480,000 due to the aggressive short-term rate increases by the Federal Reserve. By June of this year, the median home price rose to $518,000, an 8% increase from December. Single-family home prices also hit a low in January 2023 at $535,700, but by June, they climbed to $600,000 – a 12% increase.

The higher interest rates have led to a decline in home sales, with only 1,073 housing units sold in June, a 26% decrease compared to 1,451 sales in June 2022. Since the Federal Reserve started raising rates, home sales have been decreasing by approximately 400 units per month in Salt Lake County.

New listings in June fell to 7,502, down 26% from 10,153 new listings in June 2022. Properties in Salt Lake County typically remained on the market for 47 days in June, up from 17 days in June 2022.

The 30-year fixed-rate mortgage averaged 6.81 percent as of July 27. A year ago, the 30-year FRM averaged 5.30 percent.

Nationally, year-over-year, sales fell 18.9%, down from 5.13 million in June 2022, according to the National Association of Realtors®.

“The first half of the year was a downer for sure with sales lower by 23%,” said NAR Chief Economist Lawrence Yun. “Fewer Americans were on the move despite the usual life-changing circumstances. The pent-up demand will surely be realized soon, especially if mortgage rates and inventory move favorably.”

Total housing inventory registered at the end of June was 1.08 million units, identical to May but down 13.6% from one year ago (1.25 million). Unsold inventory sits at a 3.1-month supply at the current sales pace, up from 3.0 months in May and 2.9 months in June 2022.

“There are simply not enough homes for sale,” Yun added. “The market can easily absorb a doubling of inventory.”

Across the country, first-time buyers were responsible for 27% of sales in June, down from 28% in May and 30% in June 2022. NAR’s 2022 Profile of Home Buyers and Sellers – released in November 20224 – found that the annual share of first-time buyers was 26%, the lowest since NAR began tracking the data.

Distressed sales – foreclosures and short sales – represented 2% of sales in June, virtually unchanged from last month and the prior year.