There are more homes on the market in Rhode Island, but buyers are paying a significantly higher premium compared to last year, the state realtor association said in a report released Monday.

The median sales price for a single-family home in July was $495,000, a 12.5 percent increase over what buyers paid in July 2023 and a record, according to the Rhode Island Association of Realtors.

In the condo market, the jump wasn’t as high, but home shoppers are still feeling it: The median sales price for a condo was $395,000, a 9.75 percent bump and a record.

And multifamily properties are still in demand as shoppers look for an investment or a way to help them pay the mortgage. The median sales price for a multifamily in the state was $550,000, a 10 percent jump.

Inventory on the rise

Inventory bumps in the condo, single-family, and multifamily markets — 14.73 percent, 16.19 percent, and 27.04 percent, respectively — are steps in a healthy direction, but “July’s 2.2-month supply of homes for sale pales in comparison to the 4.1-month nationwide supply reported by the National Association of Realtors in June,” the association said.

“We’re seeing inventory begin to creep up slightly and mortgage rates have fallen a bit lately, but we’re still not where we need to be,” Sally Hersey, association president, said in an Aug. 2 press release on the state’s quarterly results. 

“Homeownership is out of reach for far too many Rhode Islanders,” she said.

A supply of at least five months is widely considered balanced.

“We are beginning to see an increase in the number of homes listed for sale,” Hersey said Monday. “And fortunately, anticipated rate cuts this fall should entice more homeowners who were previously unwilling to let go of their current low mortgage rates to consider making a move. While this is good news, more new development remains the key to repairing our housing crisis.”

Mortgage rates remain high

A lot of the hope for buyers hinges upon expected drops in the average rate for a 30-year fixed mortgage, but economists have warned not to expect significant decreases. The rate stood at 6.49 percent on Aug. 15. Five years ago, it averaged 3.6 percent, according to the Federal Reserve Bank of St. Louis.

“Fortunately, the Federal Reserve indicated in its July meeting that the first cut in its benchmark interest rate in more than two years could be on the table at its September meeting,” Hersey said in Monday’s release. “That would be a positive step for prospective home buyers as mortgage rates typically follow the trends set by the Federal Reserve.”

Despite climbing prices and mortgage rates in the 6s, buyers are still snapping up single-family properties:

The 18-day timeframe for single-family homes was “the shortest window on record since 1988 when record-keeping began,” the association reported.

In-migration

Out-of-state buyers are playing an outsized role in the price increases and ramped-up competition, but the pace is slowing, according to the association: “Last quarter, 23.4 percent of all residential sales were transacted with buyers from other states, compared to 26.7 percent in quarter two last year.  Unsurprisingly, Providence County attracted the most out-of-state buyers, given that most interstate sales came from neighboring Massachusetts. Newport County saw the second-highest sales involving those from other states.”

The median sales price in Providence County was $450,000 for a single-family home, an increase of 8.43 percent. Homes in Providence proper, for example, sold for a median sales price of $440,000, a jump of 13.26 percent.

In Newport County, the state’s priciest overall, the median sales price for a single-family home hit $695,000, a decrease of 0.36 percent based on a whopping 95.45 percent jump in sales. That’s 86 properties.

“The percentage of Ocean State homes sold for $1 million or more to out-of-state buyers also fell from 49.1% in the second quarter of 2023 to 42% this year,” the association reports.

There were 20 single-family home sales in the city of Newport in July for a median sales price of $1,285,000, a decrease of a little more than 17 percent.