Charlotte Region real estate in August 2022 saw home sales drop 22% year-over-year, while home prices increased 16.9%, on average. Median home sale prices set a new record. Sales dropped for an eighth consecutive month due to higher home prices, increasing interest rates, and low inventory. Homes sold in 19 days, on average. The months supply of homes, while increasing, stood at 1.5 months, keeping Charlotte in “home seller territory,” and despite an increase in inventory overall.
Charlotte Region Real Estate Activity: August 2022
Latest news on the Greater Charlotte region’s real estate market in August 2022 and what it means for you…
August 2022 home sales were down year-over-year for an eighth consecutive month. Pending sales were also down year-over-year for an eighth consecutive month. Higher home prices coupled with higher interest rates have impacted affordability and cooled buyer demand. Home buyers are frustrated by higher rates, rising home prices, and economic uncertainty. As a result, home sales and mortgage applications have fallen since last year at the same time. As pending sales are a good indicator or future sales and buyer demand, we should expect fewer closed sales in the months to come. The fact that we also see fewer new listings coming on the market indicates Charlotte region will continue to experience inventory challenges, which impact home price appreciation.
Closed sales were down 22% year-over-year in August. Closed sales were up slightly (141 homes) versus July 2022. Pending sales were also down 18% year-over-year, but increased by 129 homes from July 2022.
The real cost to buy a house has officially spiked over 50% since the start of the year and could well increase more should the Federal Reserve raise interest rates again in September. The Charlotte region housing affordability index continues to drop and impact sales volume. Housing affordability dropped 29.5% year-over-year by 28 points. Year-to-date the housing affordability index dropped 31% by 21 points.
Despite, lower closed and pending sales, average list and sale prices increased in August 2022, year-over-year. Average list and sale prices also increased since July 2022. Median sale price also increased year-over-year and was slightly higher than in July 2022. The median sale price is the best measure of price over time, as it factors out extreme highs and lows in home prices. A contributing factor to the increase in median sale price is the higher price point of homes that are for sale.
Pricing a home correctly is key for sellers, as the “right” price brings buyers and fewer days on market. In August 2022, the Charlotte region saw a 157% increase year-over-year in price reductions since the market began its shift and cooling.
Housing inventory increased for a third consecutive month in August 2022. Inventory is up 25.8% compared to the same time last year and the months supply of housing is up from 1.1 months to 1.5 months year-over-year. Month-over-month, the months supply of inventory was up by 0.1 months. Month-over-month, inventory increased by 101 homes. Continued increases in inventory should help cool price appreciation. Nonetheless, the 1.5 months supply of homes keeps Charlotte region in “seller territory.” We need four months of inventory to consider it a “balanced” market, much less a buyer’s market, which would need six months of supply.
While housing inventory has increased, new listing activity decreased 15.2% in August 2022 compared with August 2021 and is down 4.7% year-to-date compared with the same time frame one year ago. Month-over-month, Charlotte region saw 817 fewer new listings.
Averaging 19 days on market, homes continued to sell quickly, increasing by four days year-over-year and month-over-month. Year-to-date days on market were two days lower versus August 2021. With homes being purchased quickly, increases in inventory coupled with fewer new listings will do little to alleviate the inventory shortage in the short term. Longer term, with buyer activity slowing because of rising rates and prices, should sellers continue to list, inventory will slowly increase and prices should also start to settle.
With a list to sale price ratio of 98.5% in August 2022 (down 3% year-over-year and down 1.8% month-over-month), buyers are carefully scrutinizing listing prices and are beginning to see more opportunities to negotiate on price. Year-to-date, the list to sale price ratio is till 0.2% higher than in August 2021.
Moving forward into the fall selling season, lack of adequate inventory to satisfy buyer demand coupled with increasing interest rates and home price increases reducing affordability are what will hold the market back in terms of sales momentum. While buyers are frustrated by rising interest rates, rising home prices, thin inventory, and inflation, it’s not unreasonable to assume that serious buyers continue to actively look for homes. Buyers are motivated to act sooner rather than later because of rising mortgage rates and rising rents which continue to outpace monthly mortgage payments.
There seems to be lots of talk about a market crash. However, the affordability issues the Charlotte Region market is facing do not point to a housing bubble or market collapse. Housing bubble are a result of speculation and not of rising buyer demand. Speculation is not driving Charlotte area housing demand. Historically, there has not been sufficient housing built in the Charlotte region to keep up with the demand we’ve seen over the past years and the population growth in the region.
Charlotte Region Real Estate Snapshot: August 2022
Closed Sales: down 22% year-over-year; down 8.8% year-to-date.
Homes Sold: 4,392 in August 2022 versus 5,634 in August 2021; 35,671 year-to-date versus 39,112 for the same time period one year ago.
Pending Sales: down 18% year-over-year; down 13% year-to-date.
New Listings: down 15.2% year-over-year; down 4.7% year-to-date.
Inventory of Homes: up 25.8% year-over-year to 6,738 compared with 5,357 in August 2021.
Months Supply of Homes: up 36.4% with 1.5 months supply of homes compared with 1.1 months in August 2021.
Days on Market Until Sale: 19 days in August 2022 versus 15 days in August 2021. Year-to-date, days on market are down 10.0% to 18 days year-over-year from 20 days in August 2021.
Average Sale Price: up 16.9% year-over-year to $459,272. Year-to-date, average sale prices are up 16.3% to $443,626 year-over-year.
Median Sale Price: up 16.7% year-over-year to $388,505. Year-to-date, median sale prices are up 18.8% to $379,000 year-over-year.
% of Original List Price Received: 98.5%, decreasing 3% year-over-year. Year-to-date, the percent of original list price received is 101.2%, up 0.2% year-over-year.
Housing Affordability Index: down 29.5% year-over-year to 67 from 95; year-to-date, down 31% to 69 from 100.
Want to know what this would mean for your family if you decide to buy or sell a Charlotte region home?