Median home prices reached a new all-time monthly high in December, hitting $240,000 compared to $222,400 last year, an 8% increase, and a 3% jump from the November median of $232,500. December marked the 46th consecutive month of year-over-year price appreciation. Single-family home prices stood at $243,500, up 8%, while townhouse/condo prices were $206,500, up 16%.
For the year, median prices ended at $240,000, up 9% from the $220,000 median last year. The 2022 median price was an all-time high for area homes.
December’s total volume dropped to $255 million in residential real estate sold, a 32% decline over last year’s total of $376 million, but ranks as the third highest December on record behind the previous two years. 2022 ended at $4.2 billion in overall residential sales, second only to the $4.4 billion reached in 2021.
“While sales took a hit in the second part of the year, the increase in median prices kept total volumes at a record level,” said Kelley Nisbet, president of Bluegrass REALTORS®. “Market activity has returned back to pre-pandemic levels seen in 2018 and 2019. The big difference throughout the year, aside from the sharp price increases, is that inventory and listings coming online are still unusually low.”
Although housing inventory rose every month in 2022 compared to the previous year, homes on the market came in as the second lowest on record behind only 2021. Annual inventory averaged 2,616 monthly in 2022, a 5% increase over last year with a monthly average of 2,495, but 50% below the average monthly inventory of 5,242 logged in 2019, the lowest level since before the pandemic. December inventory levels hit 2,954, a 19% increase over last year’s 2,491.
New real estate listings in Central and Southern Kentucky dropped 25% in December compared to a year ago, with 775 residential properties versus 1,039 in 2021 and down 28% compared to November. For the year, new listings averaged 1,563 monthly, which was the lowest on record. Homes hitting the market were tracking normally for the first half of the year but took a downward turn when interest rates increased sharply.
“Once the interest rates jumped, sales dropped and so did new inventory as buyers hit a level of uncertainty the market hadn’t experienced in quite some time,” said Nisbet. “Although we knew activity from the previous 24 months couldn’t be sustained forever, buyers and sellers were caught off guard by the rapid spike in rates.”
The number of residential home sales decreased 37% in December from a year ago as transactions dropped below the 1,000 mark for in December for the first time since 2018. December sales were 911 compared to 1,448 last year. Sales for the year landed at 15,207 compared to 17,325 in 2021, a decrease of 12%.
Pending sales in December dropped to 738 homes under contract, down 31% from last year when pendings were at 1,071. Total pending sales for the year ended at 15,173, a 14% dip from 2021 when the total was 17,621.
The slowdown in sales and trend for pendings to be lower has pushed the months of inventory above the 3-month mark for two months in a row and has risen, year-over-year, for eight consecutive months. In December, months of inventory hit 3.2, an 88% jump from the previous year when it stood at 1.7. For the year, the monthly average of unsold homes was right at 2 months. In 2019, the average was just over 4 months, a 100% difference from just 3 years prior.
Days on market (DOM) received another bump in December with properties remaining on the market 35%
longer with an average of 35 days in 2022 compared to 26 days in 2021. The median DOM rose 157% year-over-year, from 7 days in 2021 to 18 days in December 2022.
“Interest rates have softened a little over the past several weeks and, according to experts, are projected to land in the 5-6% range for most of 2023,” said Nisbet. “Along with slightly more selection and homes staying active a little longer, buyers may not feel as squeezed going into the spring as they have over the past several months. Sales may pick back up, at least in the short term, if rates fall and inventory expands.”
Interest rate averages hit a peak in October with an average of 6.9 but were lower in November at 6.8% and closed the year at an average of just over 6.3%, according to Freddie Mac. That’s double the rate from where it was a year prior which may help to continue slowing the price increases experienced over the last several years.
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.