Buyers are staying on the sidelines
The summer of 2022 is shaping up as the Great Reset of the housing market. While the price of Charlotte homes is up from last year, we’re definitely seeing a slow but steady moderation in pricing as potential buyers opt to stay put for the time being. In fact, there are several factors at work suggesting this isn’t the time to buy. With inflation still haunting the economy, higher mortgage costs, and concerns about European war and a possible recession, many believe it’s best to remain on the sidelines for now.
The Fannie Mae Home Purchase Sentiment Index reflects these concerns. It fell last month to 62%, down 13.7% from last year. It seems to have accurately captured the growing unease of would-be home buyers, who are facing worrying trends in the cost of living. Housing affordability is now at a 33-year low, and housing inventory, which has been consistently shrinking, is now growing, a clear indicator of lessening of demand.
The current monthly indicators for the greater Charlotte area reflect these national trends. As of August 31, the inventory of homes for sale grew by a hefty 25.8% to 6,738 homes, an increase of 1,381 homes from last August. Further evidence of a cooling market can be seen in the growth in the number of days on market until sale, which edged up by 4 days to 19, a 26.7% boost from last year. However, as we mentioned above, home prices continue to climb despite the counter trends. The median sales price rose by 16.7% to $388,505, an increase of $55,695 from this time last year.
The lesson? As Doug Duncan, an economist at Fannie Mae put it, “Both homebuyers and home-sellers may be incentivized to remain on the sidelines” for the time being. Sound like good advice.