Home sales and pending sales plummeted while the supply of houses on the market soared in October, as upheaval in housing kept heaving, leaving many buyers and sellers both in the lurch.
The shift, sparked by the doubling of mortgage interest rates since March, has would-be sellers spooked and waiting to see if rates will moderate and market conditions improve before putting houses on the market.
Would-be buyers are seeing the chances of getting what they want disappear along with affordability, even as the market, with a small but growing inventory, presents them with more choices.
Sale prices remained firm, and high, in the Oklahoma City area, on inventory that remains short despite there being nearly 1,300 more houses listed for sale than a year ago. Asking prices, however, aren’t as firm, as sellers are quicker to reduce them to attract more attention from home shoppers.
Here are the freshest stats for the metro area, for October, from the Oklahoma City Metro Association of Realtors:
- Home sales: 1,431, down 19.4% from October 2021.
- Pending sales (under contract): 1,775, down 7.1%.
- Supply: 3,116, up 69.6%.
- Median sale price: $259,900, up 10.6%,
Some advantage in sale price negotiations has returned to home buyers
The market is still active, although the pace of sales slowed. It took 23 days on average to sell a house last month, still a good clip, but a week and a day longer than a year ago.
Buyers on average paid 99.9% of what sellers asked, a figure that came in at over 100% for months. The decrease, while tiny, shows that some advantage in price negotiations has returned to buyers.
“We’re not seeing the multiple offers that we were seeing. But things are still selling in a pretty short amount of time,” said Heather Davis, a real estate agent with her husband, Alan, with RE/MAX Preferred. “There are still some that are seeing multiple offers, but it all has to do with pricing right now. And the prices aren’t coming down, from what we’re seeing, as much as it’s really important (for sellers) to price right.”
Many sellers are still learning that the market has shifted, she said.
“They’ll go on the market, then have a really big price reduction within a week, and I think it’s because people are doing this let’s-try-it price, and then not selling in the first week, and they realize they’ve overshot, and when they get it to the price that was in line with the comps it’s selling within that first week,” Davis said.
Higher interest rates have cast a pall over the market, but mainly for traditional buyers, especially first-timers with little money for a down payment. That means they have to borrow more. And now it costs more to borrow.
But after a huge drop in mortgage rates last week, rates stabilized this week at around 6.5%, according to Mortgage News Daily. “Most lenders are in line with or slightly higher than they were at the end of last week,” it reported.
Realtors: Moderating interest rates, with builders cutting back, could result in a housing shortage
Any sustained rate relief, with home builders cutting back, could add to housing scarcity if buyers were to flock back in, said Lawrence Yun, chief economist for the National Association of Realtors.
“Overall housing inventory still remains near historic lows. New listings are actually lower compared to the same period a year ago,” Yun said in an email blast. “That means once the gate opens a bit for home buyers, we could again face a housing shortage.
“This is why more new home construction is needed, as well as more rehabilitation of disused buildings into residential units.”
But single-family home starts plunged 21% year over year in October, “implying we may face shortage conditions,” he said. The bottom fell out here: Starts plunged 65.8%.
Any reduction in rates opens the gates to more buyers because more borrowers can qualify for a loan.
“The fact that builders are pulling back from building could be an issue again if rates go down to a point that brings more buyers to the market,” Davis said.
Upscale market is unscathed by higher interest rates, agent says
The upper end of the market, at least, wasn’t hurting at all coming into the fourth quarter, said Brian Preston, an agent with RE/MAX at Home in Edmond, who tracks sales in the Edmond market area.
Homes priced at $1 million or more are still selling after less than a year on the market, he said in a video report, when before it often took two to five years.
Through September, 108 homes priced at $1 million or more sold in the Edmond area, Preston said.
“That’s one every 2 1/2 days. Last year was the first year we’d ever gone over 100 closed in a year. We’ve already hit that in nine months,” he said, with more under contract. “It is still a good market. It’s not like the downturns we’ve had in the past.”
Senior Business Writer Richard Mize has covered housing, construction, commercial real estate and related topics for the newspaper and Oklahoman.com since 1999. Contact him at email@example.com. Sign up for his weekly newsletter, Real Estate with Richard Mize.