Utah Association of Realtors
As housing demand moderates because of higher interest rates, buyers are beginning to see some benefits from the slower market activity.
That’s according to the latest report from the Utah Association of Realtors that showed housing conditions beginning to normalize after two years of market frenzy.
Statewide, home sales fell 25% in June compared to a year ago with Utah Realtors selling 4,129 properties in June 2022 versus 5,511 in June 2021.
U.S. existing home sales also dipped 14% year-over-year. Experts say the decline is because of affordability challenges.
“Falling housing affordability continues to take a toll on potential home buyers,” said Lawrence Yun, chief economist of the National Association of Realtors, in a press release about U.S. existing home sales. “Both mortgage rates and home prices have risen too sharply in a short span of time.”
With some buyers being priced out of the market, housing inventory has increased, providing more choices to the remaining buyers. In Utah, the number of homes for sale nearly doubled from a year ago. Statewide, there were 10,116 properties for sale in June 2022 versus 5,306 in June 2021.
Months of supply has also increased to 2.3 months from 1.1 months last year. That means competition for homes was less intense this year.
However, it’s important to note that it’s still a seller’s market. Months of supply would need to increase to more than six months to be a buyer’s market.
Contributing to the supply increase is the fact that more homeowners are putting homes up for sale. In June, Utah new listings increased 12%. Sellers put about 800 more homes on the market this year compared to last, which means buyers benefitted from a greater selection of houses when shopping.
“Finally, there are more homes on the market,” Yun said. “Interestingly though, the record-low pace of days on market implies a fuzzier picture on home prices. Homes priced right are selling very quickly, but homes priced too high are deterring prospective buyers.”
In Utah, the average days on market increased 17%, which means buyers had more time to shop for homes. On average, it took 21 days to sell a house in June.
Sellers also received a bit less of their asking price, 100% this year versus 103% in 2021. This means sellers on average sold for their list price but not above it as had become common over the past two years.
One indicator that did not improve for buyers was affordability. The Utah Association of Realtors Housing Affordability Index fell 34% from last year. A Utah family making the median income only had 66% of what it needed to buy the median-priced home. This index takes into account the effect of incomes, home prices and interest rates.
The Utah median price rose to $530,000 in June. That’s up nearly 18% from last year’s median of $450,000. This marks 123 consecutive months of year-over-year increases.
Along with prices, another factor affecting affordability is interest rates, which averaged 5.52% for a 30-year, fixed-rate mortgage in June, up from 5.23% in May, according to Freddie Mac.
Yun speculated on what he expects rates to do in the future.
“If consumer price inflation continues to rise, then mortgage rates will move higher,” Yun said. “Rates will stabilize only when signs of peak inflation appear. If inflation is contained, then mortgage rates may even decline somewhat.”
To learn more about current real estate conditions in your community, contact a local Realtor. A directory of Utah Realtors is available at UtahRealtors.com.