HOUSING WATCH

Rising Mortgage Rates Escalate Housing Affordability Predicament

The housing market in Salt Lake County experienced a slowdown in April, primarily due to the rising mortgage interest rates. Home sales declined significantly, with only 908 closings recorded, reflecting a 32.4% decrease compared to the 1,343 sales in April 2022.

Rob Ockey, President of the Salt Lake Board of Realtors®, emphasized the impact of higher mortgage rates on homebuyers, stating, “Increased mortgage interest rates have resulted in a considerable rise in monthly payments, posing affordability challenges for potential buyers. Additionally, homeowners are reluctant to sell their properties and lose their current low interest rates.”

In April, the median price for all housing types in Salt Lake County dropped to $495,000, marking a 10.8% decrease compared to the previous year. The median price for single-family homes was $577,000, down 8.9% from $633,000 in April 2022. Similarly, multi-family homes (including condominiums, townhomes, and twin homes) settled at $423,750, experiencing a 5.8% decline from the previous year.

However, the limited supply of houses is exerting upward pressure on prices. The price of a single-family home increased to $577,000 in April, representing an almost 8% rise from $535,750 in January. The days on the market for single-family homes decreased from 53 days in January to 19 days in April.

On average, all housing types remained on the market for 23 days in April, showing a significant increase compared to the five days in April 2022.

Nationally, all four major U.S. regions registered month-over-month and year-over-year sales declines, according to the National Association of Realtors®. Year-over-year, U.S. sales slumped 23.2% (down from 5.57 million in April 2022).

“Home sales are bouncing back and forth but remain above recent cyclical lows,” said NAR Chief Economist Lawrence Yun. “The combination of job gains, limited inventory and fluctuating mortgage rates over the last several months have created an environment of push-pull housing demand.”

The median U.S. existing-home price for all housing types in April was $388,800, a decline of 1.7% from April 2022 ($395,500). Prices rose in the Northeast and Midwest but retreated in the South and West.

“Roughly half of the country is experiencing price gains,” Yun added. “Even in markets with lower prices, primarily the expensive West region, multiple-offer situations have returned in the spring buying season following the calmer winter market. Distressed and forced property sales are virtually nonexistent.”

First-time buyers were responsible for 29% of sales in April, up from 28% in both March 2023 and April 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.

All-cash sales accounted for 28% of transactions in April, up from 27% in March and 26% the previous year.