New real estate listings fell to the lowest August total on record with August also becoming the sixth consecutive month that hit all-time monthly lows. This year, there were 1,567 residential properties that hit the market while last year there were 1,839, a 15% decline, however, the August total was 4% higher than the previous month.
Due to the lag in new inventory, months of inventory dropped in August, reversing a three-month rise, at 2.2 months, down 4% from a year ago and from the previous month. The lower August number also halted a 15 consecutive month, year-over-year, trend line of increases. Since the start of the pandemic, inventory levels have floated at historic lows. A six-month supply is considered a balanced market.
Overall inventory levels have declined, year-over-year, for the fifth consecutive month. In August, there were 2,679 available homes on the market, down 19% from last year’s 3,314. Despite the decline, available homes were up 4% from the previous month and topped out at the highest level of 2023 so far. Current inventory levels are running about 70% below where they were a decade earlier.
“The market is in need of homes at all price ranges, especially at the lower end,” said Kelley Nisbet, president of Bluegrass Realtors®. “The demand from consumers is there. It’s a challenging time with interest rates where they are and sellers not wanting to take on a higher rate then what they currently have so they aren’t moving up.”
Interest rates ended August at the highest level of the year with an average of 7.07% and was also the highest monthly rate on record for more than 21 years (March 2002). This is compared to 5.22% last year and up from 6.84% the previous month. Rates have increased each month since April.
The higher interest rates, coupled with limited inventory, have impacted home sales. August saw a 16% drop in residential home sales, year-over-year, with 1,238 compared to last year when there were 1,475 sales. The total sales, however, did increase from the previous month with a 12% jump from July. Single-family home sales for the month stood at 1,174, a drop of 15%, while townhouse/condo sales were 64, a decline of 30% year-over-year.
New construction sales rose to 105 in August, an increase of 1% over last year and up 18% from July.
Pending sales in August dropped 13% from the previous year with 1,227 homes under contract compared to 1,409 last year. Month-over-month, pending sales were down less than 2%.
“If you look at the number of pending sales compared to the available inventory, the market is still in good shape if we look at historical trends,” said Nisbet. “People want to move to and live in this region but we have to give them a better selection of homes and open up choices in the residential sector.”
Home prices cooled slightly from the previous month with the median reaching $260,000 in August, a 3% decrease over the record high of $267,000 last month. Year-over-year, home prices moved ahead 4% from the $250,000 median tracked last August. The August home price tracked as the third highest on record. Single family homes peaked at $260,000 while townhomes/condos hit $249,000.
August marked the 54th consecutive month of year-over-year price appreciation. However, for eleven months in a row, starting in the last quarter of 2022, year-over-year price appreciation has remained in the single-digits. Year-to-date, median prices are up 5% ($255,000) compared to 2022 ($242,000).
Total volume of residential real estate sold hit just under $368 million, a 14% decline over last year’s total of $427 million. On the year, total sales volume surpassed $2.5 billion through the first eight months of the year, down 18% from the 2022 total of $3 billion.
“Price appreciation is still occurring despite a month-over-month slowdown,” said Nisbet. “However, it’s been almost a year since we’ve seen double digit appreciation levels, so the market is adjusting back to what is seen as normal.”
Days on market (DOM) reversed course in August after dropping monthly since February. Homes sold on average in 35 days in August compared to 32 days in July and 26 days last year, marking 13 consecutive months of year-over-year increases. The median DOM only rose by one day year-over-year, from 8 days in July 2022 to 9 days this year.
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.