Increasing mortgage rates are playing a big part in the slow down of sales. The average rate on a 30-year mortgage is now more than double what it was two years ago, when it was just 3.09%.
“What we’re experiencing right now is a consistent pattern of rising rates and, unfortunately, the speed in which it’s rising is creating a shock,” said Fred Duff, a data scientist and senior mortgage banker with Queen City Mortgage, which does business in Dayton and Cincinnati. “You have pent-up demand that existed, because for about eight years (2010-2018), we had 1940s levels of home participation. So we have this demand where people could not ... obtain homeownership.”
But as mortgage rates are continuing to rise, home affordability becomes less likely and takes out of the market people who previously were considered potential homebuyers, Duff said. It also is decreasing the likelihood of the sale of a home by someone who locked in a low interest rate years ago and is “unwilling to make a move that they otherwise would have made,” he said.
“We’re clearly seeing a slowdown of the volume of buyers and sellers, but the demand is still so high because proportionately speaking what’s going on, is people that are not willing to sell their homes to trade up, we’re proportionately seeing that taper off now,” he said. “What we’re really experiencing is a shift in the market, and ultimately ... we’re going to shift from a seller’s market to a buyer’s market.”
There were 10,884 sales of single-family homes and condominiums in the Dayton region reported for the first nine months of 2023, a 13.3% decrease from the same span in 2022 when 12,556 transactions took place, according to Dayton Realtors Multiple Listing Service, which includes Montgomery, Greene, Warren, Darke and Preble counties.
The average sales price year-to-date is $255,139 and represented a 5.5% rise over 2022′s year-to-date numbers. The median sales price also grew, from $205,000 in 2022 to $225,000 through this September, a nearly 9.8% increase.
Greg Blatt, president of Dayton Realtors, said a declining amount of sales and an increase in home sales prices is not just attributable to lack of inventory to meet demand and record-high interest rates, but also to their cause.
“This is really being driven by bad policy coming out of Washington that’s driving inflation,” Blatt said Friday. “The fact that the legislature is shut down and they can’t pass a balanced budget, that they can’t get control over spending, it’s driving inflation through the roof and it’s ultimately hurting consumers.”
Sales of single-family homes and condominiums in September totaled 1,584 units, a nearly 7.8% increase over the 1,470 sales reported in September 2022.
But Blatt said September’s statistics are “an anomaly” and are likely the result of Cincinnati realtors’ sales being attached to the Dayton market following a cyberattack last month that shut down the Greater Cincinnati Multiple Listing Service.
The median sales price in September was $231,450, surpassing last year’s figure by 12.4%. The average price of $261,853 for this past September exceeded last year’s price by 10%.
Ohio homes sales in September reached 11,415, a 17% decline from the sales recorded during the month a year ago. The average sales price across Ohio in September reached $275461, a 5.9% increase from the $260,127 mark posted in September 2022, according to the Ohio Realtors.
The cost of financing a home surged again this week with the average long-term U.S. mortgage rate at its highest level since December 2000.
The average rate on the benchmark 30-year home loan rose to 7.63% from 7.57% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.94%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loan, also increased. The average rate rose to 6.92% from 6.89% last week. A year ago, it averaged 6.23%, Freddie Mac said.
Information gathered by the Associated Press was included in this report.
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