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Higher mortgage rates begin to put brakes on housing market’s wild ride

July 12th, 2022 · Leave a Comment

Although prices rose higher in June, there was tangible evidence that higher mortgage rates and inflation are beginning to put the brakes on the wild ride that Northeast Florida’s housing market has taken over the past two years.

The median sales price for single-family homes in the region settled at a historically high $400,000 in June, a 2.3% increase over the month before. However, this number is based on closed sales that included offers from a few months ago before the market began to feel the impact of rising mortgage rates.

Meanwhile, the number of closed sales, pending sales, and listing prices received have all started dropping, tangibly demonstrating that the market is slowing down. Added to that is active inventory, which increased 17.4%, as well as a 46.2% increase in the median number of days on the market. These are all indications that prices may slowly begin to “normalize” in the coming months.

“This is good news for both buyers and sellers as we move into the third and fourth quarters of 2022,” said 2022 NEFAR President Mark Rosener. “It’s encouraging for buyers, as they now have more homes from which to choose.  On the flip side, while we still have a significant “seller’s market” at just 1.8 months’ supply, sellers need to heed the counsel of their REALTORS® to price their homes accordingly.”

Specifically in June, closed sales on single-family residences registered at 2,336, a 4.1% decrease since May. June also registered 2,077 pending sales, a 13.2% decline from May when there were 2,393. And the list-price-received category dropped from 101% in May to 100.6% in June, with 38.9% of sellers getting above their asking price, a decline of 8.7% from May. Meanwhile, the active inventory of single-family homes increased to 4,109 in June, a significant increase from May 2022 when only 3,501 homes were on the market. June’s inventory represents 1.8 months of active inventory. Meanwhile, the combined condo and townhouse market showed a significant 46.3% gain in homes for sale over the previous month when the number of units increased to 1,090. The median days on the market also increased by 16.7% to 14 days.

Although higher interest rates may be slowing down the market, they are not helping to make the area more affordable. With single-family home prices still at historic highs, the home affordability index slipped down 1.3% to 78. The index measures whether a typical family earns enough to qualify for a mortgage on a typical home, based on current interest rates, median income, and median home prices.  Higher numbers mean greater affordability. In June, the combined condo and townhouse affordability index remained unchanged from the month before at 115.

NEFAR’s market reports are available at nefar.com.

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