Charlotte Region real estate market in May 2022 saw home sales drop 7.3% year-over-year and home prices increase 17.3%, on average. Sales dropped for a fifth consecutive month due to higher home prices, interest rates, and lack of inventory. Year-over-year, days on market dropped in May 2022. The months supply of homes and overall inventory were also down year-over-year. All this kept the Charlotte region a home seller’s market in May 2022 with home affordability decreasing 23.0% year-over-year and 22.8% year-to-date.
Charlotte Region Remained A Seller’s Market In May 2022
Latest news on the Greater Charlotte region’s real estate market in May 2022 and what it means for you…
May 2022 home sales were down year-over-year for a fifth consecutive month. It would appear that buyers are backing away from rising interest rates and home prices since late January, as the housing affordability index also continues to diminish. Pending sales were also down year-over-year for fifth consecutive month.
Year-to-date, buyer activity is down 4% compared with the first five months of 2021. However, month-over-month, sales had a slight increase of 1.3% compared with April 2022.
These trends could be signaling a return to a slower pace of sales, more like what we were seeing in 2019 prior to the pandemic. Closed sales were down 7.3% year-over-year in May. Pending sales were also down 2.1% year-over-year. While, the drop in sales is a result of buyers backing away from higher interest rates and higher home prices which are impacting affordability, it can also be partially attributed to the low inventory of homes.
The real cost to buy a house has officially spiked over 50% in just 6 months. The housing affordability index continues to drop and impact sales volume. Housing affordability dropped 23.0% year-over-year by 20 points. Month-over-month, the index dropped two points. Year-to-date the housing affordability index dropped 22.8% in May by 21 points.
Despite, lower closed and pending sales, both average and median sale prices increased in May 2022, year-over-year, with median sale prices reaching record highs. The median sale price is the best measure of price over time, as it factors out extreme highs and lows in home prices. Median sale price has also risen due to the higher price point of homes that are for sale.
Housing inventory remained at very low levels. With just 0.8 months supply of homes (down 11.1% from 0.9 months in May 2021), we continued to see some of the lowest levels of inventory on record in the Charlotte region. Inventory was 12.3% lower than in May 2021. This still presents a unique opportunity for sellers who are ready to list, as new listings continue to receive high visibility, spend less time on market and sell at premium prices. New listings increased by some 620 homes in May 2022 since 2022. This is a positive for home buyers, although it should be pointed out that on a year-to-date basis in May 2022, new listings were down 4.5% versus May 2021.
Averaging 14 days on market, homes continued to sell nearly as fast as they were listed. Days on market until sale were down 3 days (down 17.6%) year-over-year. They were also down 2 days month-over-month. With homes being purchased virtually as quickly as they are listed, this increase 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 to some extent.
With a list to sale price ratio of 102.9% in May 2022 (up 1.3% year-over-year), it’s clear that home sellers continue to be in command of the market and are receiving well over asking price for their homes. The list to sale price ratio was 0.1% higher in May 2022 than in April 2022. This metric is telling for sellers, as it looks at the ratio of sold price to list price.
Moving forward toward the summer selling season, lack of adequate inventory to satisfy buyer demand coupled with increasing interest rates and home price increases reducing affordability are what could hold the market back in terms of sales momentum. While buyers are frustrated by rising interest rates, rising home prices, razor-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.
Charlotte Region Real Estate Snapshot: May 2022
Closed Sales: down 7.3% year-over-year; down 3.9% year-to-date.
Homes Sold: 4,639 in May 2022 versus 5,005 in May 2021; 21,361 year-to-date versus 22,228 for the same time period one year ago.
Pending Sales: down 2.1% year-over-year; down 7.9% year-to-date.
New Listings: up 4.4% year-over-year; down 4.5% year-to-date.
Inventory of Homes: down 12.3% year-over-year to 3,788 compared with 4,319 in May 2021.
Months Supply of Homes: down 11.1% with just 0.8 months supply of homes compared with 0.9 months in May 2021.
Days on Market Until Sale: 14 days in May 2022 versus 17 days in May 2021. Year-to-date, days on market are down 20.8% to 19 days year-over-year from 24 days in May 2021.
Average Sale Price: up 17.3% year-over-year to $462,465. Year-to-date, average sale prices are up 16.9% to $430,244 year-over-year.
Median Sale Price: up 20.8% year-over-year to $391,420. Year-to-date, median sale prices are up 20.5% to $370,000 year-over-year.
% of Original List Price Received: 102.9%, increasing 1.3% year-over-year. Year-to-date, the percent of original list price received is 101.8%, up 1.5% year-over-year.
Housing Affordability Index: down 23.0% year-over-year to 67 from 87; year-to-date, down 22.8% to 71 from 92.
Want to know what this would mean for your family if you decide to buy or sell a Charlotte region home?