The rise in interest rates has continued to affect the real estate market as home sales experienced a slump going into the fourth quarter of the year. But the rate increase has not yet had the same impact on home prices.
Median home prices pushed again to a new all-time monthly high in October reaching $235,000, up 4% over last year when the median was $226,000. October marked the 44th consecutive month of year-over-year price appreciation. The October median price was, however, 3% lower than the previous month as prices start to relax toward the end of the year. Single-family home prices stood at $239,000 while townhouse/condo prices were $210,000.
October’s total volume dropped to over $315 million in residential real estate sold, a 20% decline over last year’s total of $395 million, still the second highest October on record behind the 2021 total.
Sales were down 24% in October from a year ago as transactions hit 1,153 in 2022 compared to 1,511 in October 2021. Single-family home sales declined 22% with 1,095 sales in October compared to 1,411 sales last year. Townhouses/condos dropped 42% with 58 sales compared to 100 in 2021. Townhouses/condos made up an annual low of around 5% of the total market in October.
“Sales have returned to pre-pandemic levels similar to that of 2019,” said Rusty Underwood, president of Bluegrass REALTORS®. “The growth we experienced over the past three years was unsustainable and tied directly to interest rates which had never been seen before. With rates jumping so quickly, the market received a shock that will take a few months to get over. Once these rates level off or begin to recede, we will see more buyers return back to the market.”
Interest rates have doubled over the course of the year starting at 3.45% in January and ending in October at 6.9%. This came as a result of the Fed raising the interest rate by a .75 percentage point for a fourth straight time and the sixth rate increase this year.
With rates hovering around 7%, pending sales continue to lag behind last year. October homes under contract dropped 28% from 1,521 pending sales last year to 1,091 in 2022. This also represents a 13% decrease from the month prior, signaling a potential slowdown for the remainder of the year.
“The positive news from the sudden interest rate jump is that buyers can finally take a breath when searching for a home,” stated Underwood “Demand is certainly still there but the hectic pace we experienced through most of this year has become more manageable. Prices, however, are still tracking above last year due to lower than needed supply but inventory is creeping back up.”
Housing inventory has risen every month in 2022 compared to the previous year with October reporting the highest inventory levels since prior to the pandemic. October saw the number of homes on the market jump to 3,269, a 10% increase over last year’s 2,983.
Months of inventory has remained above the 2-month mark for four consecutive months and has risen since early spring. Year-over-year, months of inventory has grown for the past 14 months. In October, months of inventory hit 2.8, a 40% jump from last year when it stood at 2.
Days on market (DOM) received a boost with the jump in inventory and lower sales. Properties remained on the market 45% longer in October with an average of 29 days compared to last year’s 20 days. The median DOM, although rising 83% year-over-year, from 6 days last year to 11 days in October 2022, still show homes selling often in a matter of days.
Starting into the last quarter of the year, new real estate listings in Central and Southern Kentucky dropped 15% compared to a year ago, with 1,395 residential properties versus 1,640 in 2021. Listings brought to market in October were down 14% from September.
“Sellers may feel reluctant to put their home on the market, however, buyer demand is still high and additional supply would certainly help,” continued Underwood. “Additionally, property equity continues to grow, especially in this region, and prices overall have not been affected by the increase in rates.”
As the region’s leading advocate for homeownership, Bluegrass Realtors® understands the value and joy of owning a home. The Association represents more than 4,000 Realtors® located in 30 counties: Anderson, Bath, Bell, Bourbon, Clark, Clay, Elliott, Estill, Fayette, Franklin, Harrison, Jackson, Jessamine, Knox, Laurel, Lee, Madison, McCreary, Menifee, Montgomery, Nicholas, Owsley, Powell, Pulaski, Rowan, Russell, Scott, Wayne, Whitley and Woodford counties. Visit www.bluegrassrealtors.com for up to the minute real estate listings and buying and selling resources.