While home prices continue to rise, Colorado Springs-area home sales fell last month and the supply of homes for sale ballooned to a nearly three-year high – signs that rising mortgage rates are finally affecting the housing market.
In June, the Pikes Peak Association of Realtors reported 1,712 sales of single-family homes and patio homes in the Springs area, a 5.7% decline over last year and the first drop since November.
Sales are down and supply is up at a time when 30-year, fixed-rate mortgages have rocketed past the 5% mark over the last few weeks and are now approaching 6%. Nationally, long-term rates averaged 5.7% last week, compared to 2.98% a year ago, according to mortgage buyer Freddie Mac.
Ann Kidd, board chairwoman of the Pikes Peak Association of Realtors, said some buyers are stepping back from their purchases because they cannot afford higher mortgage payments.
More sellers are listing their homes because they fear higher mortgage rates will shrink the buyer pool. The situation contrasts sharply with the past few years, when sellers often received multiple offers exceeding their asking price.
Sellers realize they’re not going to have a captive market that they thought they would have, and so they’re getting houses on the market sooner rather than later. Everything you read and see is doom and gloom in what’s coming, and so people are listing their houses for sale fast.
Despite last month’s increase in supply and drop in sales, prices continued to soar.
Price Increases are Slowing Down
According to a Realtors Association report, the median price of homes sold in June rose 10% over the same month last year to $495,000, a record high. Five straight months of record prices were achieved, surpassing May’s $487,000.
In the second half of 2022, we predict that the housing market will be more balanced between buyers and sellers rather than tilted exclusively to sellers.
Prices won’t necessarily fall, but they could slow down. The Realtors Association and Gazette report that June’s 10% year-over-year price gain was the smallest since June 2020’s 8.8% gain.
Inventories are balancing out
In addition to sales, sellers will not necessarily be flooded with multiple offers. In pre-Great Recession years, monthly inventories typically topped 3,000 and 4,000 listings a month, she said. The balance is coming back into our market.
Properties won’t be so overpriced, sellers won’t receive 43 offers on properties. Rather than putting up a sign in the yard, realtors will need to market and sell properties for homeowners. The buyers will need to reconsider their wants and needs based on the amount of homes they can now afford.
Real estate agents handle the transactions of homes sold by the Realtors Association. Individual owners’ homes are not included in the Realtors Association’s market trends report.