Despite rising interest rates, Lawrence home sales were up in October; prices were too
photo by: Shutterstock
Here’s the latest sign you are becoming old: You start telling young homeowners worried about rising interest rates how high your mortgage rate was on your first home. (Mine was 8.75%, and the home had a driveway that was uphill — both ways.)
Maybe some Lawrence homebuyers are getting the message, because the latest numbers show local home sales actually increased slightly in October despite rising interest rates.
The Lawrence Board of Realtors reports home sales in the city increased by 2.1% from the same month a year ago. A total of 98 homes sold in the month compared with 96 a year ago. That’s an increase normally not worth noting, but its noteworthy in this case because it is our first glimpse at the local real estate market since mortgage rates began their climb.
It was October when mortgage rates crossed the big threshold of the 7% mark. In late October, the national average for a 30-year mortgage was 7.08% compared with about 3% in October 2021.
The October numbers, which are the latest available, might be a sign of resiliency in the local home-buying market, or it also might be taking buyers a moment to pull out of the market. The report did show some signs of the latter. Pending contracts in October — which would result in sales in November or December — were down 37% compared with October 2021. So, when November sales numbers get released in the coming days, we might see a different story on how interest rates are impacting the market.
What we are not seeing is any sign of home prices coming down in Lawrence as interest rates rise. The median selling price of a home in Lawrence in October was $310,500. That’s up 26% from October 2021. That’s a greater increase than we’ve seen in many other months this year. Year to date, the median home price in Lawrence is up 14% from a year ago.
One of the more interesting items to watch, I believe, is whether home prices in Lawrence start to come down as interest rates rise. The rising interest rates are having a big impact on what a buyer’s monthly payment will be and is pricing some people out of the market. Normally, as more people get priced out of a market, sellers adjust by lowering their expectations when it comes to a selling price.
But that theory only holds true if buyers keep their homes on the market. The October numbers showed signs that some buyers are simply deciding now is not the time to sell. There were 106 active listings on the Lawrence market in October. That’s down 8.6% from a year ago and down 20% from two years ago.
That number likely will catch the eye of local real estate professionals. After years of seeing the inventory of available homes shrink in Lawrence, the market had seen active listings grow three out of the last four months. That was a sign the market was maybe becoming a little more balanced between buyers and sellers. We’ll now have to see whether the changing interest rate is shifting the dynamic once again.
In terms of other numbers from the monthly report, here’s a look:
• For the year, homes sales continue to be below last year’s marks. Year to date, 1,001 homes have sold in Lawrence, down 9.7% from the same period a year ago.
• The median number of days a home sits on the market before selling is four, thus far in 2022. That’s up from three days at this point in 2021.
• The median selling price for a home thus far in 2022 is $297,500. That’s up from $260,000 at this point last year and up from $235,000 in 2020.
• The housing market has been so hot that many homes are selling above their asking price. The average selling price in Lawrence has been 1% above the actual asking price of a home, indicating that many homes are still landing in bidding wars between buyers. That pretty much was the case last year, when homes were selling for 0.9% above asking price.