June was a rough month for the housing market, where sparse inventory and interest-rate hikes are hindering buyers and keeping potential sellers on the sidelines.
In Northeast Ohio, sales of new and previously owned properties were off by 13.7% last month, when compared with June 2022. Average prices, meanwhile, are still inching up, buoyed by bidding wars and buyers’ fast-moving pursuit of scarce listings.
That data comes from MLS Now, a regional real estate listing service that tracks an 18-county territory. This year, sales across that footprint are down by nearly 15%. That’s a difference of more than 3,500 homes.
“We’re just in a bottleneck,” said Akil Hameed, broker-owner of FASS Real Estate Services in Shaker Heights and president of the Akron Cleveland Association of Realtors.
Across the region, new listings are down 16.8% this year, according to MLS Now. Existing homeowners are staying put. Some are worried that they won’t be able to find another home to move into. Others, with low-rate debt, have little reason to move in a higher-rate environment.
The result: The supply of available homes is near an all-time low in the Cleveland area.
It would take only 1.2 months to burn through that inventory, according to June data from Redfin, a Seattle-based real estate brokerage.
That’s a particularly severe crunch, but the broad trend is similar across the state, and much of the nation.
The Ohio Realtors trade association reported Thursday, July 20, that home sales declined 13.5% in June, when compared with a year before. The National Association of Realtors also put out a lackluster monthly report Thursday, showing that U.S. sales of previously owned homes fell by 18.9% from June of last year. National sales also slowed from May to June.
“The first half of the year was a downer for sure, with sales lower by 23%” Lawrence Yun, chief economist for the national Realtors, said in a news release. “Fewer Americans were on the move despite the usual life-changing circumstances. The pent-up demand will surely be realized soon, especially if mortgage rates and inventory move favorably.”
Ralph Mantica, president of the Ohio Realtors, also blamed scant supply and higher borrowing costs.
On Thursday, the national average interest rate for a 30-year, fixed-rate mortgage was 6.78%, according to the Federal Reserve Bank of St. Louis. That’s up from 5.54% a year ago — and 2.78% only two years ago.
“The factors that have been prevalent in Ohio’s housing market throughout the year … continue to present a challenge for current and would-be homebuyers,” Mantica, a Dayton-area broker, said in a news release.
Ohio’s average sale price hit $292,433 last month, up 3.7% from a year before.
Prices keep climbing in relatively affordable Midwestern markets, even as they recede in Southern and Western states. The national Realtors said the median, or middle, sale price for an existing home was near an all-time high in June, at $410,200.
In Northeast Ohio, the average sale price for a house was $263,452 in June, up 0.9% from a year before. The typical sale price for a condo rose by 10.9%, to $226,462, MLS Now reported.
The regional numbers are based on properties that were listed with a real estate agent. They capture most of the market, but not everything.
For example, MLS Now said that June’s top transaction was a $3.42 million sale — a 28-acre Hunting Valley estate, real estate listings show. But the priciest deal actually was the $6.7 million purchase of a lakefront home in Cleveland’s Edgewater neighborhood.
That six-bedroom house was not marketed by an agent, but the transfer appears in public records.
After a stretch of boom years, the residential real estate industry is settling in for a lean period. The ranks of licensed real estate agents are thinning out, Hameed said. He’s encouraging colleagues to spend the rest of 2023 trying to burnish their skills, boost buyer confidence and diversify into other areas, like property management.
“The strong will survive,” he said. “We really just need to show our value. … This is not the time for Realtors to sit on the sidelines. I think we have to be very proactive with farming neighborhoods. We have to tell the story. We have to show our worth to consumers so they understand what it is that they actually have.”