November 2022 Market Report
HOME PRICES DIP YEAR-OVER-YEAR
For the first time since October 2014, the median sales price for homes in Ada County dropped year-over-year. In November, the median sales price of homes sold was $525,000 — 2.5% lower than in November 2021 and 6.5% less than in October 2022.
Home prices are driven by supply versus demand. Higher mortgage interest rates, combined with the swift home price appreciation in the last several years, have decreased purchase power for buyers nd lessened demand. As a result, some buyers have made budget adjustments and others have pressed pause on their home search.
Consequently, fewer buyers equated to fewer home sales for the county. There were 548 home sales in November, 39.0% less than a year ago. Of those, 380 were existing/resale homes, down 44.9% from November 2021, and 168 were new construction homes, down 19.2% from last year.
The chart below shows activity for single-family homes with or without acreage, between January 2017 and November 2022. Sales volume is impacted by several factors, one of which is mortgage interest rates as the majority of buyers finance their home purchase. The rapid increase of mortgage interest rates resulted in lower sales throughout 2022.
To attract the buyers who remain in the market, sellers are adjusting prices accordingly or offering buyer incentives like closing cost credits to buy down the interest rate. Lenders are also adapting and offering new programs to help buyers combat higher interest rates.
Those who are able to buy in today’s market have more options to choose from and more time to shop for a home than they would have a year or even six months ago. There were 1,843 homes available for purchase in Ada County in November, 131.5% more than in November 2021. Homes that closed in November spent an average of 47 days on the market before going under contract, compared to 29 days this time a year ago.
So, what’s next? Mortgage interest rates have declined in recent weeks, from the most recent high average of 7.08% on November 10, 2022, to 6.33% on December 8, 2022, according to Freddie Mac, retrieved from FRED, Federal Reserve Bank of St. Louis. While uncertainty remains around what mortgage interest rates will do — especially in response to any future Fed rate adjustments — real estate professionals are hopeful rates will continue to decline or at least stabilize in 2023.