Resale Housing Market Marches On
AVERAGE SALES PRICE AND MEDIAN PRICE CONTINUE TO BOUNCE BACK.
Like most areas across the country, year-over-year resale home market metrics have fallen flat throughout the Greater Sacramento region at the halfway mark of 2023. The current market conditions remain purely driven by the rapid rise of interest rates over the past year. Specifically, according to the Federal Home Loan Mortgage Corporation, the average 30-year mortgage rate averaged just below 3 percent for all of 2021. The average rate at the end of June 2022 was 5.70 percent and now this year, 6.71 percent.
“Buyers are still out there and adjusting with interest rate buy-down programs or the confidence that they can refinance when rates ease,” says Pat Shea, President and CEO of Lyon Real Estate. “Low inventory remains a major issue as many would-be sellers are more sensitive to the gap between their current mortgage rate and what their next rate would be. They have had life changes to inspire a move yet are lying in wait.”
The one-two punch delivered by interest rate and inventory issues resulted in a 29 percent drop in closed escrows for the second quarter versus the same period last year and a 17 percent fall-off in new open escrows. Meanwhile, standing inventory dropped nearly 50 percent compared to last year at this time leaving just 2,307 properties active and available for sale in the region at June 30th.
Some metrics support that the market remains relatively solid 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 $689,000, nearly even with June of last year. This also marked the sixth straight month of price recovery after bottoming out at $586,000 last December. The median price of $590,000 fell 3 percent short of last June but followed an identical pattern of monthly improvement. This indicates that there is activity and stability in all price points.
Other interesting indicators suggest the market is moving but at a steadier and more normal pace than during the “dream come true” interest rate period. Homes that closed escrow in June were on the market an average of 45 days compared to just 22 last year. Successful home sellers also received an average of 96 percent of their original list price down 2 percent versus last June. This remains a solid outcome for them yet well below the 103 and 104 percent highs seen in some red-hot sales months in 2020 and 2021.
“A few more bumps in interest rates may be coming. The U.S. economy has shown more underlying strength than anticipated and inflation has remained stubbornly high, with progress on core inflation stalling,” says Shea. “According to a recent Redfin study, approximately 9 out 10 homeowners with mortgages are paying less than the current average mortgage rate of 6.71 percent — the highest level in over 20 years — leaving most homeowners reluctant to list their current home and reenter the mortgage market until they are good and ready. Regardless, the job market locally remains quite strong and buyers are also in the wings. 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 evolving 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 4,236 transactions and $2.55 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 $1,209,365 to local nonprofits.
About TrendGraphix, Inc.
TrendGraphix, Inc. is a real estate data analytics company based in Sacramento that uses local Multiple Listing Service (MLS) data. Trendgraphix provides highly-visual performance and 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 brokers and agents in more than 300 brokerages across the nation. For more information about TrendGraphix, visit www.trendgraphix.com.