Monday, January 30, 2023

Utah sees largest drop in home sales in 2022

The housing market is entering the traditionally quieter winter season, but recent indicators suggest that the market has already been slowing in the last few months. New listings, pending sales, and prices are all on the decline, signs of rapid cooling after a two-year frenzy in the market.

One of the primary factors driving the slowing of the market has been inflation, including for housing costs. During the COVID-19 pandemic, the median home sale price in the U.S. increased by more than 38%, from $329,000 in the first quarter of 2020 to $454,900 in the third quarter of 2022. And as home prices have rapidly become more expensive, so has everything else: inflation as measured by the Consumer Price Index has topped 5% for 18 straight months, driven by increases in major expenses like food and rent. The effects of inflation have left potential buyers with less ability to save up for a purchase.

Adding to this pressure is an increase in interest rates. The U.S. Federal Reserve has engaged in aggressive rate hikes throughout 2022 to curb inflation, and mortgage lenders have pushed up rates for consumers as a result. The average interest rate for a 30-year fixed rate mortgage has increased from around 3% at the end of 2021 to about 6.5% now. In October, the average 30-year rate briefly passed 7% for the first time since before the Great Recession.

As a result of these factors, total home sales per month have been down year-over-year for every month in 2022, and the gap between 2021 and 2022 monthly figures has widened as the year has gone on. In October 2022, home sales fell to 439,596—a decline of nearly 30%. As total sales have declined, another important metric—the time homes sit on the market before selling—is on the rise. September was the first month since February 2021 where the median days on market for home listings exceeded 30 days. At the height of the market, the typical listing spent just 15 days on the market, but today the median listing will sit on the market for 35 days.

Few places have escaped the slowing of the market, but some locations are experiencing especially stark drops in activity. Nine of the top 10 states with the steepest drops in home sales from 2021 to 2022 are found in the Western U.S, led by Utah with a 43.2% decline. The region includes expensive states for housing like California (-37.4%) and Washington (-36.7%), along with states that boomed during the pandemic like Nevada (-40.8%), Arizona (-37.0%), and Idaho (-35.4%). Local markets in the Western region are also among the nation’s leaders in decreased home sales.

The data used in this analysis is from Redfin. To determine the locations with the largest drop in home sales, researchers at Construction Coverage calculated the percentage change in home sales from October 2021 to October 2022. In the event of a tie, the location with the greater percentage change in median days on market over the same time period was ranked higher.

The analysis found that home sales in Utah totaled 2,442 in October of this year, compared to 4,301 in 2021—a year-over-year decrease of 43.2%. Of the 47 states with sufficient data available, Utah experienced the largest drop in home sales in 2022. Here is a summary of the data for Utah:

  • Percentage change in home sales (YoY): -43.2%
  • Percentage change in median days on market (YoY): +164.7%
  • Total home sales per month (2022): 2,442
  • Total home sales per month (2021): 4,301
  • Median days on market (2022): 45
  • Median days on market (2021): 17

For reference, here are the statistics for the entire United States:

  • Percentage change in home sales (YoY): -28.8%
  • Percentage change in median days on market (YoY): +66.7%
  • Total home sales per month (2022): 439,596
  • Total home sales per month (2021): 617,752
  • Median days on market (2022): 35
  • Median days on market (2021): 21

For more information, a detailed methodology, and complete results, you can find the original report on Construction Coverage’s website: https://constructioncoverage.com/research/cities-with-largest-drop-in-home-sales-2022

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