Rising interest rates have applied the brakes on the local housing market, but a shortage of inventory is keeping prices up even as sales drop precipitously.
In Lancaster County, closed sales fell 11.5% in October, from 541 last year to 479 this year. Through the first 10 months of 2022, they are down 11.2%, from 5,249 to 4,663.
The median sold price was $301,500, up 9.6% from a year ago.
Average days on market was 20, four more than in October 2021, and the average sold to original list price ratio was 102.2%.
Of the homes that did sell last month, 281 were on the market no more than 10 days.
“We continue to have a shortage of inventory, which still has homes selling 2% above asking price on average, but the number of sales is continuing to decline at a steady and increasing rate,” Greg Bardell, 2022 president of the Lancaster County Association of Realtors, wrote in an email.
“With interest rates continuing to rise and sale prices rising, affordability is becoming a real issue,” he explained. “It is a metric we will want to be watching in the coming 12 to 18 months. Right now, stability of interest rates is more important. If we see a slowdown of the rate of increase of rates, we should see some stability of sales.”
Nationally, total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – decreased 5.9% from September to a seasonally adjusted annual rate of 4.43 million in October, the National Association of Realtors reported. Year-over-year, sales in October dropped 28.4%.
“More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher,” NAR Chief Economist Lawrence Yun said in a release. “The impact is greater in expensive areas of the country and in markets that witnessed significant home price gains in recent years.”
The Realtors Association of York & Adams Counties reported that the 1,041 houses sold in Adams County through October are a 1% decrease from this time last year. In York County, 5,576 homes were sold during the first 10 months of 2022, which is a 9% decrease.
In October alone, the 90 settlements in Adams were 16% fewer than a year ago, while the 517 houses sold in York were a 19% decline from October 2021.
Last month, the median sales price in Adams County was $279,750, an 8% increase since last year. In York County, the median sales price in York County was $246,000, also up 8%.
Elle Hale, 2022 president of the York-Adams association, said in a release that average mortgage rates in York and Adams counties were around 6.75% in October, double the rate from six months ago.
While rising mortgage rates continue to sideline buyers, lack of inventory remains an issue. “It’s kind of slim pickings,” she said in a phone interview.
Some homes are selling quickly but others are sitting on the market, Hale said.
As far as interest rates are concerned, she said, any drop is welcome news. In the week ending Nov. 17, according to Freddie Mac, a 30-year fixed-rate mortgage averaged 6.61%, down from 7.08% the week before, the largest weekly drop since 1981. A year ago, the 30-year fixed rate averaged 3.10%.
Closed sales in October fell 20.9% in Cumberland County, from 321 to 254. The median sold price rose 10.2%, from $256,914 to $283,000; days on market averaged 18; and the average sold to original list price ratio was 100.2%.
In Dauphin County last month, closed sales dropped 18.2%, from 369 to 302, while the median sold price climbed 3.6%, from $210,900 to $218,500.
Days on market averaged 17, and average sold to OLP ratio was below asking price, at 98.9%.
In more rural Perry County, closed sales in October declined from 37 to 26; the median sold price rose $3,000 to $229,000; days on market averaged 20; and the average sold to OLP ratio was 96.9%.
“The number of homes receiving multiple offers and escalated prices has slowed,” Sylvia Hess, 2022 president of the Greater Harrisburg Association of Realtors, wrote in an email.
“Some of that is seasonal but the majority is due to a bit of a ‘wait and see’ mindset many buyers (and sellers alike) seem to be having.
“With mortgage rates more than doubling this year, and changing almost daily (sometimes up, sometimes down slightly), sellers are seeing properties remain on the market a bit longer and are becoming more realistic. Buyers, on the other hand, have more leverage in the market and increased negotiating power.”
Hess said if newly listed properties aren’t receiving showings in the first two weeks, “it’s likely that they are priced beyond the market” and an adjustment may be necessary.
“If a home remains on the market for 10 or more days,” she said, “buyers are better positioned to negotiate contracts with contingencies.”
Low housing inventory and limited new home construction also remain a challenge, Hess explained.
“Fluctuations in interest rates have had some buyers (and sellers) sideline themselves until they see things stabilize. The rise in interest rates in many cases has cut significantly into homebuyers’ purchasing power and causing some buyers to revisit their budgets.
“Ironically, though, those continuing their search have been finding opportunities in this market,” she noted, because of their increased leverage.
Paula Wolf is a freelance writer