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Rising Rates, Tight Inventory Impact March Home Sales

Averaage Home Sale Price Holds Steady

The Champaign County Association of REALTORS reports Champaign County area home sales tightened in March due to continued inventory level declines and rising mortgage rates.

CCAR reported a total of 207 closed sales (single family and condominiums) in March, down 2.36 percent from 212 sales reported in March 2017. The Champaign County area median home sales price also declined 3.24 percent to $146,500 from $151,400 in March 2017. The average home sale price remained relatively stable at $170,708, a decline of 0.13 percent from $170,933 in March 2017.

“Dropping inventory levels in the Champaign county area had a direct effect on March homebuying activity as did rising mortgage rates,” said Max McComb, president of the Champaign County Association of REALTORS®. “Despite those factors weighing on the market, home sales were only off 2 percentage points (down just 5 sales) from March a year ago with prices remaining relatively stable. Our pending home sales data reveals the spring housing market had a late start this year and we should see closings in April in the positive territory.”

There were 317 pending sales reported in March as compared to 278 a year ago in March, revealing a 14 percent gain. Pending sales for the month of March reflect the total number of active listings that went under contract and are awaiting closing usually 30 to 60 days in the future.

“The Federal Reserve raised its key short-term interest rate by .25 percent in March, citing concerns about inflation. It is the sixth-rate increase by the Fed since 2015, and at least two more rate increases are expected this year,” notes McComb. “New listings on the market declined 10.5 percent in March and we are hopeful that more sellers are just waiting for warmer temperatures to realize the spring market is upon us.”

The average rate on a 30-year fixed rate mortgage according to the Federal Home Loan Mortgage Corporation (Freddie Mac) was 4.44 percent in March 2018, up from 4.22 in March 2017 and up from 4.33 percent in February of 2018. The 30-year fixed rate mortgage for the week ending April 19th reached 4.47 percent, the highest level since January of 2014.

At the national level, housing affordability is down from a year ago, according to joint research from the National Association of REALTORS® and realtor.com.

The lack of entry-level supply is putting affordability pressures on too many buyers – especially those at the lower end of the market, where demand is the strongest. This is why first-time buyers continue to struggle finding affordable properties to buy and are making up less than a third of home sales so far this year,” said Lawrence Yun, chief economist for the National Association of REALTORS®.  “Wages are growing, which is welcome news for prospective buyers, but prices are increasing at a faster rate, up almost 6 percent nationally in the first two months of 2018.” Yun now forecasts existing-home sales to be around 5.51 million – flat from 2017. The national median existing-home price is expected to increase around 4.2 percent. In 2017, existing sales increased 1.1 percent and prices rose 5.8 percent.

  “With the start of the spring buying season in full swing, one of the top wild cards for the housing market in coming months will be how both buyers and potential sellers will adjust to the steady climb in mortgage rates since late last year. Higher rates are especially hitting younger buyers hard and is having an adverse effect on their ability to buy a home,” said McComb.  “We definitely need to see an influx of more listings on the market and hopefully in these next few months sellers will see that inventory remains tight and demand is high and for that reason it is a great time to be a seller.”

The Champaign County Association of REALTORS® is observing April as Fair Housing Month and remembering the 50th anniversary of the Fair Housing Act. In 2018, CCAR joins the National Association of REALTORS® in a year-long landmark anniversary through a series of education events.

“Fair housing remains a core focus for the housing industry and Champaign County area REALTORS® are working to ensure policies, education and programs are in place to affirmatively further fair housing principles,” said McComb. “CCAR is proud to be a part of the year-long commemoration of the Fair Housing Act.”

The Champaign County Association of REALTORS® is a voluntary trade organization serving Champaign County and surrounding areas and is the leading resource for REALTOR® members and an advocate for homeownership and private property rights. Statistics are from residential sales within Champaign County. Data compiled by Midwest Real Estate Data, LLC as available on April 14, 2018.

Tuesday, April 24, 2018/Categories: News Releases