Charlotte Region real estate in December 2022 saw home sales drop 37.7% year-over-year, while home prices increased 7.3%, on average. Sales dropped for a 12th consecutive month due to higher home prices, increasing interest rates, and fewer new listings. Homes sold in 41 days, on average. The months supply of homes, while increasing, remained below two months at 1.6 months, keeping Charlotte in “home seller territory.” Home affordability continues to suffer.
Charlotte Region Real Estate Activity: December 2022
Latest news on the Greater Charlotte region’s real estate market in December 2022 and what it means for you…
December 2022 home sales were down year-over-year for a 12th consecutive month. Pending sales were also down year-over-year for a 12th consecutive month. Sales are happening, but not at the volume or pace of the prior year or even earlier in 2022.
Higher home prices coupled with higher interest rates have impacted affordability and continued to cool buyer demand in the second half of the year. The market in 2021 was clearly an anomaly and we can now see that year-over-year sales declines over all of 2022 appear significant. Sales are still occurring… just not at the pace of the last couple of years.
Home buyers are frustrated by higher rates, rising home prices, and economic uncertainty. Consequently, home sales and mortgage applications have fallen since last year as buying “power” declines. Pending sales are a good indicator of future sales and buyer demand. We should expect fewer closed sales in the months to come. Furthermore, 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 37.7% year-over-year in December. Closed sales were down by just 48 homes versus November 2022. However, compared with December 2021, closed sales were down by 1,845 homes. Pending sales were also down 32.4% year-over-year. Month-over-month we saw 396 fewer pending sales in December versus November 2022.
The real cost to buy a house has spiked over 55% since the start of the year, as the Federal Reserve raised rates seven times in 2022. Mortgage rates topped 6% for the first time since 2008 and went over 7%. The Charlotte region housing affordability index continues to drop and impact sales volume. Housing affordability dropped 27.3% year-over-year by 24 points. Year-to-date, the housing affordability index dropped 33.7% by 32 points.
Despite, lower closed and pending sales, average list and sale prices increased in December 2022, year-over-year. Home prices are still increasing, but at a slower pace. Median sale price also increased year-over-year. The median sale price is the best measure of price over time, as it factors out extreme highs and lows in home prices. Month-over-month, both average and median sale prices decreased.
Housing inventory increased for a seventh consecutive month in December 2022. Inventory is up 54% compared to the same time last year. The months supply of housing is up from 0.8 months to 1.6 months year-over-year. Month-over-month, the months supply of inventory was 0.2 months lower. Month-over-month, inventory decreased by 847 homes. Continued increases in inventory with weaker buyer demand should help cool price appreciation. Nonetheless, the 1.6 months supply of homes keeps Charlotte region in “seller territory.” We need four months of inventory to consider it a “balanced” market. A buyer’s market would need six months of supply.
While housing inventory has increased, new listing activity decreased 31.3% in December 2022 compared with December 2021 and is down 10% year-to-date compared with the same time frame one year ago. Month-over-month, Charlotte region saw 932 fewer new listings.
Averaging 41 days on market, the days on market increased 21 days year-over-year and by seven days month-over-month. Year-to-date days on market were three days higher compared with December 2021. Pricing a home correctly is increasingly critical for sellers, as the “right” price brings buyers and fewer days on market. With new listings down, increases in inventory 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 94.7% in December 2022 (down 5.5% year-over-year and down 1% month-over-month), buyers are carefully scrutinizing listing prices and negotiating on price. Year-to-date, the list to sale price ratio declined 1.1% to 99.7% in December 2022. Buyers may have more bargaining power now than at any point during the pandemic.
Moving forward into the winter selling season, slowing buyer demand because of economic concerns, increasing interest rates and home price increases reducing affordability are what will hold the market back in terms of sales momentum.
Charlotte Region Real Estate Snapshot: December 2022
Closed Sales: down 37.7% year-over-year; down 15.3% year-to-date.
Homes Sold: 3,065 in December 2022 versus 4,919 in December 2021; 50,286 year-to-date versus 59,344 for the same time period one year ago.
Pending Sales: down 32.4% year-over-year; down 20.5% year-to-date.
New Listings: down 31.1% year-over-year; down 10% year-to-date.
Inventory of Homes: up 54% year-over-year to 6,479 compared with 4,205 in December 2021.
Months Supply of Homes: up 100% with 1.6 months supply of homes compared with 0.8 months in December 2021.
Days on Market Until Sale: 41 days in December 2022 versus 20 days in December 2021. Year-to-date, days on market were three days higher at 22 days compared with one year ago.
Average Sale Price: up 7.3% year-over-year to $436,920. Year-to-date, average sale prices are up 14.9% to $444,600 year-over-year. Month-over-month, average sale price decreased $6,370 in December. Year-to-date, average sale price was essentially flat, decreasing just $574.
Median Sale Price: up 6.8% year-over-year to $373,625. Year-to-date, median sale prices are up 16.7% to $379,890 year-over-year. Month-over-month median sale price dropped $7,375. Year-to-date, median sale price was flat, decreasing $100.
% of Original List Price Received: 94.7%, decreasing 5.5% year-over-year. Year-to-date, the percent of original list price received is 99.7%, down 1.1% year-over-year.
Housing Affordability Index: down 27.3% year-over-year to 64 from 88; year-to-date, down 33.7% to 63 from 95.
Want to know what this would mean for your family if you decide to buy or sell a Charlotte region home?