What a Difference a Year Makes for Home Sales
June new pending sales and closed escrows both fall nearly 30 percent below last year.
Year-over-year resale home market metrics have changed dramatically throughout Greater Sacramento at the halfway mark of 2022. This is largely due to a rise in mortgage interest rates that, according to the Federal Home Loan Mortgage Corporation, or FHLMC, averaged just below 3 percent for all of 2021 yet rested closer to 5.5 percent last month. A well-documented 38 percent increase in average sales price over the past 24 months across the region is further compounding the affordability challenge for prospective buyers.
The one-two punch delivered by price and interest rate jumps resulted in a 29 percent drop in closed escrows last month and a 27 percent fall in new open escrows. Meanwhile, standing inventory has doubled compared to last year at this time, leaving 3,510 properties active and available for sale in the region at June 30.
“The market is definitely in an eye-catching transition phase,” says Pat Shea, president and CEO of Lyon Real Estate. “It is probably much too soon however, to predict exactly when the market will reach equilibrium and what that will look like.”
Some metrics support that the market remains relatively strong by historical standards and most likely will chug along through the remainder of the summer. The average sales price for homes that closed escrow in June was $688,000. This was a 4 percent drop versus May but still a 6 percent lift compared to June of last year. The median of $611,000 followed a nearly identical pattern indicating there is stability in the market.
Other interesting markers suggest plenty of buyers remain active and serious about their goals. Homes that closed escrow in June were on the market an average of 16 days. This is an unremarkable increase versus recent market lows of 12 days. Successful sellers also received an average of 100 percent of their original list price. A very solid outcome for them yet below the 103 and 104 highs seen in recent red-hot sales months.
“The abrupt and rapid escalation in mortgage interest rates essentially tossed a bucket of cold water on a red-hot market,” says Shea. “Rest assured though, that the residential real estate party in Greater Sacramento is far from over. Even with the current fall off in new sales and increase in standing inventory, less than 2 months of resale housing supply remains available in the market. The local employment market news is also quite positive. The housing market is surely adjusting but will likely settle into a much more normal balance over the remainder of 2022. The best thing that a home seller or buyer can do is choose a very knowledgeable and highly resourceful real estate professional to guide them through these changing times.”
This market information was presented by Lyon Real Estate based upon data provided by Trendgraphix Inc., a Sacramento-based reporting company.
About Lyon Real Estate
Lyon Real Estate is the leading independent real estate brokerage company in Greater Sacramento (Sacramento Business Journal). We are proud to be homegrown, privately owned, and internationally known. Lyon has served the area for over 75 years. Last year, the company closed a total of 6,039 transactions and $3.39 billion in sales volume. Lyon Real Estate has over 800 agents in 17 offices located throughout the region. The company is a member of the Leading Real Estate Companies of the World®, the largest network of premier locally branded firms, as well as LeadingRE’s Luxury Portfolio International® program. In addition to its real estate services, Lyon Real Estate offers RELO Direct, a global relocation program. Since 2015, the Lyon Cares Foundation has contributed more than $1,017,900 to local nonprofits.
About TrendGraphix, Inc.
TrendGraphix, Inc. is a real estate reporting company based in Sacramento that uses local Multiple Listing Service (MLS) data to provide highly-visual market statistical graphs to real estate brokers, agents, and MLS/Realtor associations across the country. TrendGraphix’s programs are currently used by tens of thousands of agents in more than 250 brokerages in 48 states. For more information about TrendGraphix, visit www.trendgraphix.com.