Delaware had bucked the national trend with higher home sales each month from March to June and again in August, but September sales slid – and comparisons to last year are dismal.
Home sales in Delaware fell 5.38% in September compared to August and were 19.64% lower than September 2021, but rising interest rates weren’t necessarily the culprit.
Delaware Association of Realtors president Susan Giove explained there’s a lag between when the sales process starts and when it’s completed. The September sales were based on what interest rates were 45 to 60 days earlier.
Giove said inflated prices were part of the equation.
She said buyers shouldn’t let fear of the Federal Reserve stop them from pursuing a purchase if they’ve found the right home.
“Rumor has it that the feds will stop increasing the rates, all depending upon the midterm elections in less than two weeks,” Giove said.
Historically speaking, interest rates are still low, and a well-versed mortgage lender can offer a variety of loan products that will work best for the buyer, she said.
Overall, though, it’s still a seller’s market with prices near historical highs and better than a year ago, even with the median price declining in September.
Her advice to owners who are thinking about selling: “Do it now. The market always slows down around the holidays.”
Inside the sales numbers
In 2022 in Delaware, sales rose each month from February to June, then dipped in July, went up in August and fell in September.
However, sales every month this year have been lower than the same month in 2021 and those comparisons are getting worse.
Sales from February to June this year were lower by less than 4% compared to the same months in 2021, but then interest rates climbed to about 6% in June. After that, sales tanked in July, August and September by more than 16% each month compared to last year.
Two positives for buyers
While the dramatic rise in interest rates has been a tough pill to swallow, two dim lights are shining for buyers:
1. The median price of homes sold in Delaware was down in September to $320,000, compared to $350,000 in August, a drop of 8.57%. That was the first decrease since June when the median price was $333,000, a dip from $334,950 in May.
But compared to September 2021, the median price is still up by 13.87% from $281,000.
2. The inventory of homes for sale in September was 2,342, up 19.85% from 1,954 in September 2021. Homes were on the market for an average of 24 days, the same as August, but a week longer compared to 17 days in September 2021.
More:Need a bargain home in Delaware that’s not falling apart? Here are the best places to look
National trends continue downward
In the U.S., existing-home sales slid in September for the eighth month in a row, according to the National Association of Realtors.
Sales fell 1.5% from August to an annual rate of 4.71 million. Compared to September 2021, the number plummeted by 23.8% when the annual rate was 6.18 million sales.
“The housing sector continues to undergo an adjustment due to the continuous rise in interest rates,” said Lawrence Yun, chief economist at the National Association of Realtors.
Nationally, the median existing-home price in September was $384,800, an 8.4% increase from September 2021 when it was $355,100. This marks 127 consecutive months of year-over-year increases, the longest streak on record, Yun said.
However, month-to-month, the national median price declined for the third month in a row after reaching a record high of $413,800 in June.
More:See the list of million-dollar homes for sale in Delaware cities and towns
Interest rates, mortgage applications
Mortgage applications decreased 4.5% for the week ending Oct. 14 from the previous week, according to the Mortgage Bankers Association. Compared to the same week in 2021, applications were down 38%.
The mortgage refinancing index fell 7% from the previous week and was 86% lower than the same week in 2021.
“Mortgage applications are now into their fourth month of declines, dropping to the lowest level since 1997,” said Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association.
When the 30-year fixed mortgage rate hit 6.94%, that was the highest level since 2002, he said.
“The speed and level to which rates have climbed this year have greatly reduced refinance activity and exacerbated existing affordability challenges in the purchase market,” Kan said.
For a 30-year fixed rate mortgage, rates climbed steadily from August 2021 until a pullback this year in July and August before shooting sharply higher in September and October, as the Federal Reserve continues to increase rates. The Federal Home Loan Mortgage Corporation, known as Freddie Mac, announces rates each Thursday, and we took a snapshot of those rates on the third Thursday of each month compared to the average on the same day from the website Mortgage News Daily in the chart below.
Reporter Ben Mace covers real estate, housing and development news. Reach him at rmace@gannett.com.
