LEXINGTON, Ky. (Feb. 28, 2018) — Coming off a record-breaking year in 2017, the real estate market in Kentucky continued its run of strong sales activity and increasing home values in January.
Total home sales in January were the second highest on record at 3,024, only 27 sales shy (0.1 percent) of the 3,051 sold during the same month in 2017. January was only the 13th month in the past six years that sales dipped year over year. It did, however, mark the third straight month where homes sold were down compared to the same month the year prior.
“Even though home sales were down slightly in the first month of the year, activity is still strong across most parts of the state and hovering at all-time highs, despite the suppressed inventory levels,” said Steve Cline, 2018 president of Kentucky Realtors. “This year should continue to see good movement in the market and will pick up even more if the number of homes available for sale increases, especially through new construction.”
Median home prices across the state rose 4.6 percent in January to $122,433, up from $116,994 in January 2017, making it the highest median price recorded for January in any year. Total sales volume hit $544 million in January, a 5.9 percent increase over 2017. Home prices, according to Lawrence Yun, chief economist for the National Association of Realtors, are being driven higher due to lack of available properties not only in Kentucky, but across the entire country.
“The utter lack of sufficient housing supply and its influence on higher home prices muted overall sales activity in much of the U.S. last month,” Yun said. “While the good news is that realtors in most areas are saying buyer traffic is even stronger than the beginning of last year, sales (nationally) failed to follow course and far lagged last January’s pace. It’s very clear that too many markets right now are becoming less affordable and desperately need more new listings to calm the speedy price growth.”
In Kentucky, however, affordability is less of a problem than in many parts of the country. The median home price nationally was $240,500, almost double what is seen throughout the state. In the three largest metro areas, Louisville, Lexington and northern Kentucky, median home prices were still 30 to 35 percent lower than the U.S. as a whole.
Housing inventory in the state leveled in January, down only 2%, after rising 2.4 percent in December and remaining even in the fourth quarter of 2017. With 5.3 months of inventory reported, this is considerably more than the national level of 3.4 months. Six months of inventory is considered a balanced market. NAR is reporting the tide may finally be turning for housing inventory as new home construction jumped in January and homebuilder confidence is high. These two factors will hopefully lay the foundation for the building industry to meaningfully ramp up production as 2018 progresses.
Days on market (DOM), an indicator that shows housing demand, dipped 11.5 percent to 116 days in January. In 2017, days on market dropped to 118 days, which reflects that homes are still moving quickly when brought to market.
“The market is only going to become more competitive as the weather changes, buyers continue their search for homes and the promise of higher interest rates stays on the horizon,” says Cline. “Those planning to buy a home this spring should get pre-approved for a mortgage soon and, conversely, sellers that will be listing their home in the spring or summer months should start preparations now so it’s ready to go when the time comes to get it listed. With the economy in good shape, I’m predicting that real estate in Kentucky will continue at a strong pace throughout the year.”