Home sales have taken a dramatic plunge across much of Central Kentucky, with the latest data from Bluegrass REALTORS indicating many home buyers have been priced out.
A new report from the realty association, which represents realtors in 30 counties across Central Kentucky, credits a scant number of homes available for sale and skyrocketing interest rates that doubled over the course of the year.
As a result, the number of home sales across the region was down 24% in October from where it was a year earlier. Transactions fell from 1,511 in October of 2021 to 1,153 in October of 2022. More specifically, single-family home sales declined 22% over that same period, and sales of townhomes and condominiums fell by 42%.
Bluegrass REALTORS President Rusty Underwood said the data show “sales have returned to pre-pandemic levels.”
“The growth we experienced over the past three years was unsustainable and tied directly to interest rates which had never been seen before,” Underwood said in a news release on the report.
It pointed to doubling interest rates as one key factor. The country started off 2022 with interest rates at 3.45%, then saw them rapidly ascend to 6.9% by October.
“With rates jumping so quickly, the market received a shock that will take a few months to get over. Once these rates level off or begin to recede, we will see more buyers return back to the market,” Underwood said.
Home price growth shows no signs of slowing long term
With interest rates so high, fewer people are able to finance home loans, the Bluegrass REALTORS report bears out. That’s led to a dramatic drop in home sales, but these market dynamics haven’t yet translated into cheaper home prices.
On the contrary, median home prices pushed again to a new all-time monthly high for October – reaching $235,000 across the association’s 30-county coverage area. That’s up 4% over last year when the price for a middle-of-the-road home was $226,000.
October also continued the persistent trend of rising home prices; it marked the 44th month in a row of year-over-year price increases for homes in the area.
Median single-family home prices stood at $239,000 while townhouse/condo prices were $210,000, according to the report.
What about home prices in Lexington/Fayette County?
Median home prices in Fayette County experienced a surge of 15% from October 2021 to October 2022, per the association’s report.
That puts the median home price in Fayette County at $300,000, up from where it was in 2021 at $262,000.
Median home sale price data from the brokerage website Redfin varied from data provided by Bluegrass REALTORS.
For example, median home sale price for the month of October peaked at $319,000 Oct. 31, according to Redfin. The trend is visible in the graph below.
Here’s a look at what Redfin shows for total homes sales over time in Lexington. The data show 717 homes sold in October in 2021 versus 592 in October of 2022.
Note: These graphics will automatically update as new data become available.
What does this mean for home buyers in Central Kentucky?
The frenzied pace of home sales seen earlier in the year has waned, and homebuyers can enjoy at least a seasonal respite – though they’ll likely have to wait a while longer for home prices to come back down.
“The positive news from the sudden interest rate jump is that buyers can finally take a breath when searching for a home,” Underwood said. “Demand is certainly still there but the hectic pace we experienced through most of this year has become more manageable. Prices, however, are still tracking above last year due to lower than needed supply but inventory is creeping back up.”
What does this mean for sellers? According to Underwood, “sellers may feel reluctant to put their home on the market, however, buyer demand is still high and additional supply would certainly help. Additionally, property equity continues to grow, especially in this region, and prices overall have not been affected by the increase in rates.”
Bluegrass REALTORS represents individuals in 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.
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