Interest rates are holding back home sales in the Dayton area
High interest rates prevent homeowners from putting their homes on the market and continue to reduce the low inventory of Dayton area homes for sale.
The amount of homes sold in the Dayton area fell again in August compared to the previous year, but the median sales price continues to rise, according to Dayton Realtors.
There were 9,284 sales of single-family homes and condominiums reported during the first eight months of 2023, which represents a roughly 16% decrease from 2022 when 11,047 transactions occurred during the same time period, according to the Dayton Realtors Multiple Listing Service, which includes Montgomery And green. and Warren, Darke and Preble counties.
The year-to-date average sales price is $253,921 and represents a 4.7% increase over 2022 year-to-date numbers. The median sales price also grew from $205,000 in 2022 to $222,000 as of last June, an increase of approximately 8.3%.
“It’s just a lack of inventory, and higher interest rates don’t seem to be slowing down the buy side,” said Greg Platt, president of Dayton Realtors. “The number of sales has decreased but the number of sales is primarily due to not having enough inventory to meet demand. There are still people who want to buy, but we don’t have the inventory to sell to them, so that’s why we’re losing unit volume.”
The average interest rate on a 30-year fixed mortgage has remained above 7% for five straight weeks, according to Freddie Mac.
While higher rates make it more expensive for buyers, they also convince many homeowners to stay put rather than sell.
According to Redfin, 91.8% of US homeowners with a mortgage have an interest rate of less than 6%; 82.4% had a rate of less than 5%; And 62% have a rate of less than 4%. This is significantly lower than last week’s rate of 7.18% and is a good reason to avoid selling a home and forfeiting a more attractive price.
The number of new listings year-to-date in the Dayton area is 11,953, down 11.6% from 13,525 listings last year through the end of August 2022. Listings submitted in August showed only 2,434 new listings available, compared to 1,739 in August 2022. .
Platt said he doesn’t see anything on the horizon that would change things and put the market in a better direction.
“Constructors are trying to build, but rising interest rates have slowed new construction a little bit, so the cost of materials, the cost of labor, and increasing interest rates have slowed new construction,” he said. “The only way we can get out of this low-inventory market is if we have to build more homes.”
To do this, the real estate market, including builders, needs to work with local municipalities and the federal government to create policies that allow homes to be built more quickly, Platt said.
“This starts at the local level,” he added. “It starts with zoning, it starts with the permitting process, it starts with incentives for builders to come into an area and develop it, whether that’s tax breaks or anything else, but it’s the cost of construction, coupled with higher interest. The rates that have really slowed down new construction. And unfortunately, This is the only thing that will help alleviate the inventory shortage.
Single-family home and condominium sales in August totaled 1,383 units, down 14.3% from the 1,614 sales reported in August 2022, and the 12th consecutive month of year-over-year losses.
The average sales price in August was $222,000, exceeding last year’s figure by about 8.3%. The average price of $253,921 last August beat last year’s price by 4.7%.
Ohio home sales in August reached 12,730, a decrease of 17.2% from the 15,380 sales recorded during the month last year. The median sales price across Ohio in August reached $285,305, a 6.6% increase from the $267,610 mark set in August 2022, according to Ohio Realtors.
“August home sales reflect market dynamics of higher mortgage rates and lower inventory,” Ohio Realtors & Real Estate Agent in the Dayton area said. President Ralph Manteca. “Ohio’s real estate market continues to demonstrate its resilience, evidenced by the continued increase in home prices, highlighting consumers’ confidence in homeownership as a wise investment.”