Inflation Rate Falling & Pace of Home Sales Improves

According to the US Bureau of Labor Statistics, the Consumer Price Index (commonly known as the inflation rate) has fallen to 5.0% as of March 2023. It rose to a peak of 9.1% in June of 2022, having a deep impact on the pace of real estate sales. The combination of both rising interest rates and rising prices was a double whammy that took many buyers out of the market completely. Year over year the number of home sales has fallen by more than 20% each month since July 2022, which directly correlates to the peak inflation. Mortgage rates increased with inflation but tailed by a few months and peaked in October 2022. From November through January, home sales were down roughly 40% from the previous year.

Thankfully, there are signs suggesting the worst is over. The Federal Reserve has been increasing interest rates steadily over the past year in an attempt to curb inflation and their efforts have worked. While the inflation rate has fallen to 5.0%, the Federal Funds rates and mortgage rates have not come down yet. However, the slowed pace of home sales is beginning to show signs of improvement. In March, home sales were down 15% from the same month last year, but that’s a marked improvement from a 40% loss in the previous few months.

Owners of real estate can still be grateful to be owners. Home prices have not fallen in the Charlotte market as a result of the slowed pace of sales. In March of this year, the average sales price was up 6% from last year and the median price, while below 1%, still showed a positive gain.

Hopefully, the falling inflation will result in eventual lower interest rates and will help fuel a continued recovery of the pace of home sales. April is the prime selling season, so the numbers over the next few months will give us a much better idea of how things will look for 2023. In real estate, waiting for a better time has never been a good investment strategy. The data looks good for numbers to improve and now is still a great time to make your move.

This week we’ll send out our monthly E-Newsletter reporting the market stats for single family home sales in Mecklenburg County. Here’s a brief summary comparing March to the previous month, and the same month last year:

  • Home sales are up 39% from last month, but down 15% from last year.
  • Average sales price is up 5% from last month and 6% from last year.
  • Median sales price is up 2% from last month and up less than 1% from last year.
  • Average price per square foot is up 3% from last month and 3% from last year.
  • Sale to list price ratio remains at 99% from last month, but down from 103% last year.
  • Days on market is down 13% from last month, but up 188% from last year.
  • Pending sales are up 5% from last month, but down 24% from last year.
  • Supply is up 3% from last month and up 148% from last year.
  • Mortgage rates at 6.27% are down from 6.6% last month, but up from 4.17% last year.
  • Average house payment is up 1.3% from last month, but up 34% from last year.

Photo by Ian Taylor on Unsplash

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