Sep. 22—EAU CLAIRE — The hot season for home sales cooled off this year in western Wisconsin and the rest of the state.
Though prices remain high, a shortage of inventory and eroding affordability are factors that contributed to a 10.5% drop in home sales in May through August in Wisconsin when compared to the same time last year.
"While there are still motivated buyers in the market and homes continue to move at a brisk pace, the limited supply and declining affordability have constrained home sales this summer," Brad Lois, chairman of the board at the Wisconsin Realtors Association, said in a news release.
During the past four months, there were 32,293 homes sold in Wisconsin, down from 36,096 during the prime selling season in 2021, according to a report issued this week by the association.
The 12-county area of western Wisconsin was close to the state's figure with a 10.7% sales drop during the busy season.
Eau Claire County alone went from 657 during last year's busy season to 589 this time — a 10.4% drop. Chippewa County's sales figures fell 13.2%, going from 355 down to 308.
Dunn County has been faring better than many others this year though and only had its sales come in a scant 1.3% lower for the busy season. There were 224 homes sold in that county in the past four months, just three fewer than the same time in 2021.
Prices remain higher than last year as supply still hasn't caught up with demand.
The median price of a home in Eau Claire stood at $275,000 last month — $25,000 higher than a year ago. Similar price appreciation was reported for Chippewa and Dunn counties.
"The higher cost of homes in our area has led to a smaller pool of buyers, but it's still a competitive market due to the lack of available homes," Scott Rohde, president of the Realtors Association of Northwestern Wisconsin, said in a news release. "Until we have more inventory available, we are likely to see home prices continue to rise."
Along with houses selling for higher prices, buyers who need financing have also seen rising mortgage rates, impacting how much they can afford.
Dave Clark, an economist at Marquette University and a consultant for the Wisconsin Realtors Association, said the Federal Reserve's efforts to tame inflation by raising its rates, has also influenced mortgage rates to climb.
"As a result, we should expect additional upward pressure on mortgage rates over the next six to 12 months," Clark stated in comments released by the association. "Indeed, the 30-year mortgage rate went over 6% in mid-September for the first time since 2008, and we expect the upward trajectory to continue until inflation eases significantly."
With fewer people financially able to vie for homes, it could slow increases in house prices, but is not expected to reverse them.
"Lower affordability is driving some potential buyers out of the market, and that will likely slow the pace of price appreciation," stated Michael Theo, president and CEO of the Wisconsin Realtors Association. "However, until we move toward a more balanced market, home prices will continue to increase at or near the double-digit pace we've seen year to date."