Clark County’s average home price continued to trend downward last month, providing a ray of hope for prospective homebuyers. But low inventory, declining sales and increased mortgage rates continue to make for a weakening housing market.
October’s median residential sales price stayed level at $525,000 compared with September, while the average price fell 3.2 percent to $565,400, according to the most recent Regional Multiple Listing Service report.
Terry Wollam, managing broker at Wollam and Associates, said this downward trend is not surprising.
“I think that there’s a sentiment from buyers that they’ve seen some drops in pricing and they’re hoping that those prices would continue to drop,” Wollam said. “Statistically, it’s hard to reject that.”
Sales activity dropped for the third month in a row. Clark County had 480 new pending residential sales in October, down 14.9 percent from September and 29.2 percent from August.
“People are not selling their homes,” Wollam said. “That’s limiting the sales activity. It also limits the amount of homes that come on the market.”
With fewer homes entering the market, residential listing activity has slowed, dropping nearly 15 percent compared with September. “Between September and October, we only saw our total number of active listings increase by 16 homes,” Wollam said. “That doesn’t bode well for the long-term affordability of housing.”
One reason people aren’t selling their homes is high interest rates, Wollam added.
Interest rates for 30-year fixed mortgages rose to 7.08 percent before falling last week to 6.61 percent, according to the government-sponsored home mortgage packager Freddie Mac. High mortgage rates generally deter home sales, as they mean a higher monthly payment for buyers.
Last week’s drop in mortgage rates, therefore, could be a good sign for the housing market. But there is still a long way to go as buyers continue feeling the impacts of inflation and high interest rates set by the Federal Reserve, Freddie Mac explained on its website.
Meanwhile, inventory remains limited. Clark County had 1.85 months of standing residential inventory in October, according to Windermere Northwest Living broker Mike Lamb’s monthly market report. This means it would take less than two months for all homes on the market to sell if no new supply were added.
Weak listing activity combined with slowed construction due to high development costs are contributing to this lack of supply, Wollam said.
“There are still more people moving to the area, there are still job increases, so there is still demand,” he said. “New construction has cut in half on the amount of inventory it’s providing. That’s really needed to help build up that inventory to help provide price stabilization.”
Given the low home inventory and high 30-year fixed mortgage rates, Wollam advises prospective homebuyers to educate themselves on other types of loans available.
“It’s concerning to me that there’s going to be pressure for prices to increase based off of lack of inventory,” he said. “So I would be more focused on interest rates and what financing options they have, and taking advantage of the lower prices through the next few months.”
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