In the ever-fluctuating landscape of the American real estate market, existing home sales have recently hit a seven-month low. A combination of surging borrowing costs, escalating sales prices, and limited inventory has conspired to create a challenging environment for prospective homebuyers. In this blog post, we'll delve into the factors behind this decline in home sales and explore the repercussions it has had on the market.

Mortgage Rates and Buyer Sensitivity

One of the primary culprits behind the slump in existing home sales is the increasing sensitivity of potential buyers to fluctuations in mortgage rates. Since mid-August, mortgage rates have stubbornly remained above 7%, and this trend has significantly impacted affordability. As borrowing costs soar, many aspiring homeowners find themselves priced out of the market. The consequence? A 0.7% month-over-month decrease and a striking 15.3% year-over-year drop in existing home sales, as reported by the National Association of REALTORS® (NAR).

Local Market Snapshot: Washtenaw County

The impact of these national trends can also be observed at a local level. In Washtenaw County, for instance, we see a nuanced picture of the housing market. For single-family homes, new listings decreased by 10.8%, while townhouse/condo listings increased by 1.0%. Pending sales, however, experienced a surge, increasing by 32.7% for single-family homes and 28.0% for townhouse/condo units.

The dichotomy continues in the realm of housing prices. Median sales prices in Washtenaw County soared by 5.5% to $399,900 for single-family homes, while townhouse/condo prices witnessed a more significant uptick of 13.5%, reaching $295,000. However, these increasing prices are met with prolonged days on the market, which rose by 13.0% for single-family homes and a substantial 65.2% for townhouse/condo units. Inventory, too, tells a challenging story with a decrease of 32.8% for single-family homes and a staggering 41.0% for townhouse/condo homes.

National Trends Impacting Local Markets

The local trends in Washtenaw County reflect a larger national issue. Prices have continued to rise despite the softening of home sales across the country. The primary driver of these price increases is the persistent lack of available inventory. This scarcity has kept the market fiercely competitive, leading to bidding wars and homes selling above their asking prices in some regions.

Heading into September, the situation remains challenging, with only 1.1 million units available for sale. This represents a 0.9% decrease from the previous month and a notable 14.1% decline from the same period in the previous year, according to NAR. As a result, the U.S. median existing-home sales price has surged by 3.9% year-over-year, reaching $407,100. This marks the third consecutive month that the median sales price has eclipsed the $400,000 mark.

In conclusion, the challenges in the housing market are multi-faceted, encompassing rising borrowing costs, increasing sales prices, and dwindling inventory. While these factors have caused a recent dip in existing home sales, they have simultaneously driven prices to new heights, creating a fierce competition among prospective buyers. As we navigate these complexities, it's essential for both buyers and sellers to remain vigilant, adapt to changing conditions, and seek expert guidance to navigate the ever-evolving real estate landscape.

Find out what your home could be worth

FREE analysis of your home! Find out your home value, home equity, refinance and mortgage reduction and much more!

Meet the DMA Real Estate Team

DMA Real Estate is a team of experienced, licensed real estate agents serving the Washtenaw County, MI metro area. With a proven track record of getting results quickly and a direct line of communication at all times.