LEXINGTON, Ky. — The Bluegrass region’s residential real estate market faced significant headwinds in October, with pending sales for the month dropping to the lowest level since 2014. The 949 homes under contract marked an 11% decline from the previous year, reflecting the impact of interest rates reaching their highest monthly level in 23 years, as reported by Freddie Mac.
The average rates for October reached 7.62%, up from 7.2% the previous month and 6.9% a year ago. However, rates have started to soften into November with many national forecasters, including the Mortgage Bankers Association, predicting that rates will fall to around 6% by the end of 2024 and hover in the mid-5% range going into 2025.
Kelley Nisbet, president of Bluegrass Realtors, offered insights, “Home buyers should understand that if they want to buy or choose to enter the housing market now, refinancing is always an option if rates do come down. Home prices are continuing to rise, and buyers can miss out on equity gains by trying to time the market according to the rates.”
Despite the challenging landscape, October marked the 56th consecutive month of year-over-year price appreciation, with year-over-year price appreciation rising by 10%, the first time in a year reaching a double-digit increase.
The median home price in October hit an all-time monthly high of $257,500, reflecting a 10% increase over the previous year’s $235,000, and up 1% from the September median of $255,000, reversing a two-month decline. Single-family homes peaked at $256,300, and townhomes/condos hit $265,000. Year-to-date, median prices are up 6% ($255,000) compared to 2022 ($240,250).
Total volume of residential real estate sold in October dipped just under $294 million, indicating an 11% decline over last year’s total of $332 million. On the year, total sales volume surpassed $3.1 billion through 10 months, down 15% from the 2022 total of $3.7 billion.
Nisbet added, “Even though local home prices have surged over the past couple of years, the median price across the Bluegrass region is still at 65% of the national total, which reached an October record of $391,800. And with prices up, people who bought just before the pandemic have accumulated, on average, over $85,000 in housing wealth.”
In contrast, home sales struggled in October, with the 1,017 transactions being down 16% from the previous year’s 1,214 and 8% from the prior month. Single-family home sales for the month stood at 947, a drop of 18%, while the 70 townhouse/condo sales increased by 19% year-over-year.
New construction sales remained flat from September to October, with 95 transactions in both months, but down from 100 last year, representing a 5% decline.
Months of inventory (MOI) in October rose to the highest level since February due to the continuation of slower sales, reaching 2.9 months, up 4% from a year ago and 16% from the previous month when it was 2.5 months. Despite this, and although MOI is adjusting higher, available inventory levels have floated at historic lows since the start of the pandemic.
With slower monthly sales over recent months, the region’s overall inventory levels have risen to the highest level of the year in October and totaled seven consecutive month-over-month gains. The 2,930 homes available in October represented a substantial increase of 8% from the previous month. However, inventory levels have declined, year-over-year, for the seventh consecutive month, with 3,403 homes on the market last October, a 17% decrease. Current inventory levels are still about 65% below where they were a decade ago and just over half of where they were just prior to the pandemic.
Days on market (DOM) in October marked 15 consecutive months of year-over-year increases, with properties remaining on the market for 36 days. Last year, the average was 30 days and, in September, was 33 days. The median DOM climbed a day year-over-year, from 11 days in September 2022 to 12 days this year. For the year, the average DOM jumped from 25 last year to 38 through October.
October continued an eight-month stretch of all-time monthly lows in new listings, with 1,352 new properties hitting the market, down 6% from last year and 5% from September.
Nisbet concluded, “The year so far has remained fairly consistent – sales are slower, prices are up and inventory is still a concern. When interest rates start dropping, however, the market will become more competitive as buyers will enter back into the fold. If you are a buyer looking to purchase, now may be a good time to start that process.
Bluegrass Realtors represents more than 4,000 Realtors located in 30 counties: Anderson, Bath, Bell, Bourbon, Clark, Clay, Elliott, Estill, Fayette, Franklin, Harrison, Jackson, Jessamine, Knox, Laurel, Lee, Madison, McCreary, Menifee, Montgomery, Nicholas, Owsley, Powell, Pulaski, Rowan, Russell, Scott, Wayne, Whitley and Woodford counties.
