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Higher mortgage rates impact summer selling season

May 15th, 2023 · Leave a Comment

Mortgage increases appear to be having a big impact as the Northeast Florida housing market heads into the busy summer selling season.

Closed sales, pending sales, and new listings dropped in April, indicating that many homeowners who hold mortgages with low interest rates have decided to stay put, wait, and see what the future holds as far as mortgage rates go. Meanwhile buyers have been dismayed to discover that, although they may have a better selection of single-family homes on the market due to increased inventory, prices were also slightly higher in April.

“Just like the seasons the market has changed,” said 2023 President Diana Galavis. “The fluctuating interest rate has put some buyers and sellers on pause, however, there are still buyers who are choosing homeownership. This is reflected in a low month’s supply of inventory, which has contributed to moving the median sales price up.”

For Northeast Florida’s six counties, the median price of single-family residences inched up 2.8% to $370,000 with the price per square foot rising by $4 to $202 from March to April. Meanwhile, closed sales plummeted 19.2% to 1,757; pending sales fell 3.6% to 2,097, and new listings decreased 1% to 2,950. Active inventory rose 5.5% to 4,667 and the median days on the market quickened by 10% to 36 days.

In April, single-family homes became slightly less affordable with the Home Affordability Index dropping from 76 the month before to 74.  The Housing Affordability Index measures housing affordability for the region. In other words, it 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.  A higher number means greater affordability. An index value of 100 means that the average family has exactly enough income to qualify for a mortgage.

“Factors such as inflation, rising interest rates, and the cost of goods and services play a role in home affordability,” Galavis said. “REALTORS® are committed to fair and equal housing opportunities for all. There are many steps in the process of buying, selling, and investing in real estate and using a REALTOR® is the smart way to get professional help.”

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

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