Charlotte Region real estate in October 2022 saw home sales drop 29.9% year-over-year, while home prices increased 18.1%, on average. Sales dropped for a 10th consecutive month due to higher home prices, increasing interest rates, and fewer new listings. Homes sold in under one month, on average. The months supply of homes, while increasing, stood at 1.8 months, keeping Charlotte in “home seller territory,” and despite an increase in inventory overall. Home affordability is suffering.
Charlotte Region Real Estate Activity: October 2022
Latest news on the Greater Charlotte region’s real estate market in October 2022 and what it means for you…
October 2022 home sales were down year-over-year for a 10th consecutive month. Pending sales were also down year-over-year for a 10th consecutive month. Higher home prices coupled with higher interest rates have impacted affordability and continue to cool 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. As pending sales are a good indicator or 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 29.9% year-over-year in October. Closed sales were down by 678 homes versus September 2022. Pending sales were also down 33.9% year-over-year and month-over-month with 476 fewer pending sales in October versus September 2022. Buyer foot traffic (also an indicator or buyer demand) dropped from 7.1 showings per listing in September 2022 to 6.5 showings in October 2022.
The real cost to buy a house has spiked over 55% since the start of the year, as the Federal Reserve raised rates four times between June and November 2022. Mortgage rates topped 6% for the first time since 2008. By October 31st, we were seeing the 30-year fixed rate at around 7.1%. Meantime, the jumbo rate hit a 12-year peak of 6.27% in mid-October. The Charlotte region housing affordability index continues to drop and impact sales volume. Housing affordability dropped 33% year-over-year by 31 points. Year-to-date the housing affordability index dropped 35.7% by 35 points.
Despite, lower closed and pending sales, average list and sale prices increased in October 2022, year-over-year. Median sale price also increased year-over-year, but was essentially flat month-over-month, decreasing by just $550. The median sale price is the best measure of price over time, as it factors out extreme highs and lows in home prices. Pricing a home correctly is key for sellers, as the “right” price brings buyers and fewer days on market.
Housing inventory increased for a fifth consecutive month in October 2022. Inventory is up 42.1% compared to the same time last year. The months supply of housing is up from 1.1 months to 1.8 months year-over-year. Month-over-month, the months supply of inventory was up by 0.2 months. Month-over-month, inventory increased by 407 homes. Continued increases in inventory should help cool price appreciation. Nonetheless, the 1.8 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, which would need six months of supply.
While housing inventory has increased, new listing activity decreased 23% in October 2022 compared with October 2021 and is down 7.4% year-to-date compared with the same time frame one year ago. Month-over-month, Charlotte region saw 452 fewer new listings.
Averaging 27 days on market, homes continued to sell relatively quickly, increasing by 10 days year-over-year and by five days month-over-month. Year-to-date days on market were flat compared with October 2021. With homes being purchased quickly and 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 96.6% in October 2022 (down 3.9% year-over-year and down 0.6% 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 declined 0.5% to 100.4% in October 2022.
Moving forward into the late fall/early winter 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.
Talk about a market crash continues in many media sources. 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: October 2022
Closed Sales: down 29.9% year-over-year; down 11.5% year-to-date.
Homes Sold: 3,568 in October 2022 versus 5,093 in October 2021; 43,861 year-to-date versus 49,569 for the same time period one year ago.
Pending Sales: down 33.9% year-over-year; down 17.5% year-to-date.
New Listings: down 23% year-over-year; down 7.4% year-to-date.
Inventory of Homes: up 42.1% year-over-year to 7,511 compared with 5,286 in October 2021.
Months Supply of Homes: up 63.6% with 1.8 months supply of homes compared with 1.1 months in October 2021.
Days on Market Until Sale: 27 days in October 2022 versus 17 days in October 2021. Year-to-date, days on market were flat at 19 days compared with October 2021 and September 2022.
Average Sale Price: up 18.1% year-over-year to $458,563. Year-to-date, average sale prices are up 16.4% to $445,332 year-over-year.
Median Sale Price: up 13.3% year-over-year to $379,500. Year-to-date, median sale prices are up 18% to $379,900 year-over-year.
% of Original List Price Received: 96.6%, decreasing 3.9% year-over-year. Year-to-date, the percent of original list price received is 100.4%, down 0.5% year-over-year.
Housing Affordability Index: down 33% year-over-year to 63 from 94; year-to-date, down 35.7% to 63 from 98.
Want to know what this would mean for your family if you decide to buy or sell a Charlotte region home?