Home prices in the Central and Southern Kentucky region rose to a new all-time monthly high for February, hitting $235,000 compared to $220,000 last year, a 7% increase. February marked the 48th consecutive month of year-over-year price appreciation.
The median home price was 3% lower in February than January’s home price of $243,000. For five months in a row, starting in the last quarter of 2022, year-over-year price appreciation has remained in the single-digits. Throughout much of the pandemic, double-digit increases were common.
February’s total volume dropped to $215 million in residential real estate sold, a 19% decline over last year’s total of $266 million, but ranks as the third highest February on record behind the previous two years.
“New listings coming online still remain slower than what the current market demands,” said Kelley Nisbet, president of Bluegrass Realtors®. “While this keeps prices elevated, the level of appreciation isn’t as aggressive as it was over the past two years as fluctuating interest rates have temporarily suppressed the market. Once rates stabilize, we should see activity in the market pick back up.”
New real estate listings across the region decreased 12% in February compared to a year ago, with 1,111 residential properties versus 1,262 in 2022. The drop in new properties coming to market in February follows three consecutive monthly lows starting in November.
Pending sales in February declined to 1,089 homes under contract, down 7% from last year when pendings were at 1,171 but up 6% from the previous month when they stood at 1,023. The current pending sales total is tracking with pre-pandemic levels of 2018 and 2019. February also marked the first month since June 2022 with declines in the single digits year-over-year.
Residential home sales were 817 in February, a 22% decrease from a year ago when there were 1,052 sales. February’s single-family home sales stood at 767 and dropped 22% while townhouse/condo sales were 50 and declined 15%. Sales in February did post the first month-over-month increase, up 14%, since August 2022, ending a 6-month streak of declines.
“The slowdown in transactions is a result of the sudden spike in interest rates that are still impacting borrowers today,” continued Nisbet. “Sellers are hesitant to put their homes up for sale and some buyers are still on the fence. February data did show signs of improvement so the spring and summer may turn things around.”
Due to the pause in market activity, inventory levels have seen a somewhat artificial bump over the past year as sales started to slow last spring. Active residential inventory levels have risen, year-over-year, for 11 straight months with 2,613 homes on the market in February, up 20% from the 2,004 homes on the market last year. However, inventory totals were down 8% compared to the previous month and have decreased, month-over-month, for 4 consecutive months, largely because of the lower number of new listings coming online.
Months of inventory fell back below the 3-month mark after three consecutive months over that mark, with 2.9 months in February, a 52% increase over the 1.9 months in 2022. Year-over-year, months of inventory has risen for ten consecutive months. The February total is 19% below where it stood in the previous month.
Days on market (DOM) has been trending up for the past seven months, and stayed above 45 days for the second month in a row. February hit 47 days, a 47% increase over last year when it was 32 days. February is the highest monthly average in 30 months, when it was 48 days in July 2020. The median DOM rose 188% year-over-year, from 8 days in February 2022 to 23 days this year.
“With sales down, buyers will see an uptick in the number of homes available and those homes tend to stay active a little longer than normal,” said Nisbet. “To hit what would typically be considered a balanced market of 6 months of inventory, available housing units would need to essentially double and we just aren’t seeing those trends. When sales rebound, inventory could pose the same problem as it has in the past.”
Interest rates started the year lower than when they hit their peak in late 2022, with an average of 6.26% for February, according to Freddie Mac. In the last couple of weeks, rates have seen some volatility which may continue until there is a consensus about when the Fed believes inflation is curbed.
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.