The Columbus housing market remained on fire in May but a growing number of signs point to a slowdown ahead, especially in Northeast Ohio.
Columbus-area home sales jumped 7.5% in May over last May, while prices leapt 13% from a year ago to yet another record. The median sales price of a Columbus-area home in May was $310,830, up from $275,000 last May.
Homes sold after being listed an average of 12 days, down from 14 days a year ago and well below historic norms.
Nationally, however, home sales fell 3.4% in May, the fourth straight month of declines, adding to growing indications that the housing market is slowing down as mortgage rates continue to climb.
“Home sales have essentially returned to the levels seen in 2019 — prior to the pandemic — after two years of gangbuster performance,” Lawrence Yun, chief economist with the National Association of Realtors said in a news release.
“Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year,” Yun added.
The average 30-year mortgage rate rose to 5.78% last week, double what it was in September and the highest rate since 2008, according to the federal mortgage agency Freddie Mac.
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"While home sales continue to be propped up by positive demographics and a solid job market, the combination of rapidly rising mortgage rates and house prices are taking some of the steam out of the housing market," wrote Nationwide Chief Economist David Berson in an analysis of Tuesday's sales figures.
"We expect existing home sales to continue to slow over the course of the year as mortgage rates move higher, and this will eventually help house price gains to slow," Berson added.
In a separate report, the real-estate information service Attom Data Solutions identified markets most vulnerable to declines, based on affordability, the number of properties "under water," foreclosure rates and unemployment.
While communities in New Jersey, Illinois and California are most at risk, other areas, including Northeast Ohio, are close behind.
According to Attom, Cuyahoga, Lorain and Lake counties, all in the Cleveland area, are within the Top 30 counties at risk of price declines. Other Ohio counties in the Top 100 include Trumbull and Mahoning (Youngstown), Lucas (Toledo), Portage and Summit (Akron), Stark (Canton), Columbiana (Salem) and Montgomery (Dayton).
The Ohio county least at risk of a housing downturn is Wayne, which includes Wooster.
“While the housing market has been exceptionally strong over the past few years, that doesn’t mean there aren’t areas of potential vulnerability if economic conditions continue to weaken,” said Rick Sharga, executive vice president of market intelligence at Attom. “Housing markets with poor affordability and relatively high rates of unemployment, underwater loans, and foreclosure activity could be at risk if we enter a recession or even face a more modest downturn.”
Still, Nationwide's Berson does not expect home prices to actually decline, despite growing signs the economy is headed for a recession.
"If the economy does fall into a recession over the next 24 months, the drop in sales will be larger and house price gains will slow more rapidly. But in the absence of a deep and sustained economic downturn, home sales should not drop as they did in the housing bust — allowing prices to continue to move higher on average."
This article originally appeared on The Columbus Dispatch: Price of Columbus home climbs to $310,000 but signs point to slowdown