As potential buyers are discouraged or priced out by rising mortgage rates, the housing market is cooling, leading to an increase in home inventory.
As a result, Utah’s major metro area Salt Lake City was one of the nation’s major housing markets to see the largest year-over-year increase in inventory last month.
That’s according to the latest figures from RE/MAX, which released its national May housing market report on Friday.
By the numbers: Salt Lake City saw a 110.8% change in its housing inventory year-over-year starting in May 2021. The only other metro area that saw a bigger increase in inventory is another market in the housing that exploded during the pandemic: Coeur d’Alene, Idaho. There, the month’s inventory supply rose 111.9% year-over-year in May, according to RE/MAX.
- Salt Lake City’s May 2022 inventory supply was 0.9, down from 0.4. This figure is the total number of residential properties listed for sale at the end of the month (current inventory) divided by the number of sales contracts signed (pending listings) during the month.
- The number of foreclosed home sales is also down 9.7% in Salt Lake City from the same time last year, but up 5.1% since April.
- In Salt Lake City, the median home sale price is still well over half a million. The region’s median selling price was $551,413 in May, up 22.5% year-over-year.
So even though inventories have increased as sales have slowed, that doesn’t mean there are suddenly a lot of homes to buy. Utah’s housing shortage persists, the market is still extremely tight, the competition is still relentless, and prices are still high.
In Utah, rising mortgage rates in April pushed the median monthly mortgage payment up nearly $1,000, from about $1,629 in April 2021 to $2,256 last month, a jump of 56%.
And that was ahead of the Federal Reserve’s latest 0.75% rate hike announced on Wednesday, the biggest hike since 1994. As a result, the average 30-year fixed mortgage rate rose above 6%, its highest level since before the financial crisis of 2008, against only 3% at the start of the year.
Housing experts here have predicted that rising rates will cause the Utah market to slow after a two-year frenzy – but that doesn’t mean a bubble is about to burst and home prices are about to fall.
Pundits keep reminding us that Utah — and the nation — still faces a housing shortage that largely contributed to rising home prices that only accelerated amid the crisis. home-hungry frenzy that has been unleashed amid the COVID-19 pandemic as many Americans, together freed up by remote work, reassessed their lives and decided to sell, buy or move.
What’s happening to the US real estate market: Even though May is generally one of the busiest months for home sales, U.S. home sales were 8.5% lower than May 2021, RE/MAX reported. However, sales are still up 5.8% from April this year.
Inventory rises slightly – May marked the second month in a row that US housing inventory rose this year. May is also the first month this year with the highest inventory levels compared to 2021.
- May closed with 16.3% more homes for sale than April of this year and 2.2% more than May 2021. The monthly supply of inventory rose from 0 .8 in April to 0.9 in May. However, that’s still less than a year ago, when inventory was at 1.0, RE/MAX reported.
“A drop in home sales isn’t entirely unexpected given the higher mortgage rate environment, but the inventory gains are good news for buyers who are now starting to see a few more listings hitting the market. market during their home search,” Nick Bailey, RE/MAX President and CEO said in a prepared statement Friday.
“There are multi-family and single-family housing options that weren’t available just a few months ago. Affordability remains a concern, but homebuyers are regaining some control that was long overdue,” Bailey said.
Homebuyers may have a little more choice, but prices – you guessed it – keep going up.
- The median U.S. home sale price of $439,000 was up 1.2% from April’s 425,000 and was 13.2% higher than the median price of $380,000 in May 2021.
Are the offers always more in demand? Yes, homes still sell well above asking prices.
- The average close-to-list price ratio in the United States was 103% in May, meaning homes sold for 3% above asking price. This is, however, slightly lower than last month, when the average close-to-list price ratio was 104%, but slightly higher than this time last year, when the ratio was 102% in May 2021.
How fast do homes sell? In the United States, homes spent an average of 23 days on the market in May. They sold three days faster last month, but also two days faster than they sold in May last year.