Utah continues to have a hot housing market although the market cooled slightly in July from the white-hot levels seen earlier this year.
Utah home sales fell 26% as some buyers dropped out of the market because of record-high home prices. That’s according to a new report from the Utah Association of Realtors that reported on July housing activity statewide.
The median sales price of Utah homes sold increased 28%, reaching a new record high of $455,000. That’s an increase of more than $100,000 in the past year.
Even with the benefits of low interest rates, the rising prices continued to erode affordability. The Association’s Housing Affordability Index fell 22% from last year. In July, a Utah family making the median income only had 84% of what it needed to qualify for the median-priced home. That’s the lowest affordability in the history of the index that dates back to 2006.
Utah is not alone in its housing affordability challenges. Access to attainable housing continues to be an issue throughout the country.
“Housing affordability for first-time buyers is weakening,” said Lawrence Yun, chief economist of the National Association of Realtors, in a recent press release about metro area home prices. “Unfortunately, the benefits of historically low interest rates are overwhelmed by home prices rising too fast, thereby requiring a higher income in order to become a homeowner.”
The market continues to challenge home buyers because of the lack of housing supply. In Utah, the inventory of homes for sale fell nearly 41% in July. That’s down significantly from last year, but is a slightly lower drop than the 50-60% declines seen earlier this year.
“Housing supply will be critical in moderating the growing housing costs and rising rents,” Yun said. “Any disincentive to produce more housing inventory, such as extending the eviction moratorium, will only worsen the current shortage.”
The 6,233 properties available for sale at the end of the month equates to 1.3 months of housing supply.
While this has improved slightly from earlier months in the year when there was only one month of housing supply, it is still much lower than the six months of supply typical of a balanced market. Some Realtors have commented that they are still seeing multiple offers on properties but not quite as many as they did earlier in the year.
“There are signs of more supply reaching the market and some tapering of demand,” Yun said. “The housing market looks to move from ‘super-hot’ to ‘warm’ with markedly slower price gains.”
Even though the market has cooled slightly, homes continue to sell quickly. In July, properties stayed on the market an average of 18 days. That ties the record for the fastest average sales time.
On average, sellers continued to receive more than their asking price. The percent of original list price received was nearly 103% in July. That’s still at near-record levels though not quite as high as the nearly 104% seen earlier in the year, although sales activity typically cools in July with the summer vacation season.
Moving forward, Yun warns homeowners not to expect the extraordinary home-price appreciation that occurred in the past year.
“Home price gains and the accompanying housing wealth accumulation have been spectacular over the past year, but are unlikely to be repeated in 2022,” Yun said.
Of course, housing conditions will vary by local area. To see a summary of home sales and prices by county, visit UtahRealtors.com. For an in-depth look at housing conditions in your neighborhood, contact a local Realtor.