2023: Real Estate market slows due to rising interest rates
Last year saw the wildest real estate market in history, with record sales in both the number of homes sold and the price homes were selling for. This year looked very different. With inflation roaring across the United States, the Federal Reserve raised interest rates multiple times throughout 2023 to hamper demand. Buyers saw a 30-year fixed-ratemortgage in January 2022 at an average of 3.2%. That average sits at 6.2% to close out the year.
On a local level, there were 916 homes sold in Lehi during the first three quarters of 2021. The number of homes sold in Lehi during the first three quarters of 2022 was 750. A drop of 18.2% year over year.
The National Association of Realtors reported a nationwide home sales drop of 35.4% in November from the previous year. Nationally, there were 6.3 million homes sold in November of 2021; this year, that number was 4 million.
While home sales are down, values are not seeing the same reduction. Nationally the median existing-home price for all housing types in November was $370,700, an increase of 3.5% from November 2021 ($358,200), as prices rose in all regions.
Lehi has recently seen a slight reduction in median sales price, with November’s median closing at $501,000, compared to $520,000 a year ago. A decrease of 3.7%.
While home sales and prices are down, existing inventory remains low.
Existing home inventory has consistently stayed low, but new-build inventory has increased throughout the year. Buyers found themselves in stiff competition for new build homes over the last few years, with many buyers bidding and paying thousands over the asking price while waiting months for their homes to be built.
Most production builders now have readily available homes and are offering prospective home buyers an array of incentives, including price reductions, closing cost contributions, complimentary upgrades or lower interest rates.
With inflation taming slightly and interest rates slowly coming down over the past six weeks, consumers will be watching to see whether the 2023 real estate market looks more like 2021 or 2022.