Soaring mortgage interest rates are taking bite out of Utah home sales

As home mortgage interest rates soar well above 6 percent from their sub-3 percent levels just over a year ago, home sales in Utah are slowing rapidly, according to the Salt Lake Board of Realtors. The average 30-year, fixed-rate mortgage increased to 6.3 percent last week, according to Freddie Mac.

“The Federal Reserve’s aggressive rate hikes seem to be having little effect on inflation, but a chilling effect on the housing market,” said Steve Perry, president of the Salt Lake Board of Realtors. “We are selling about 400 fewer homes a month than the 10-year average.”

Higher rates are disqualifying home buyers from financing, Perry said. Home sales of all housing types in August fell to 1,204, down 27 percent from sales in August 2021. Active listings on UtahRealEstate.com topped 10,000 homes, a 150 percent increase over the 4,000 active listings at this time last year. The number of homes for sale has reached a balanced level.

“The bidding wars are over,” Perry said. “Offers above asking price and waiving of appraisals have ended. Home buyers have more choices and options when purchasing a house.”

Although home prices are still higher than a year ago, the slowing sales are beginning to take a toll on pricing as well. The single-family median home price in August was $601,000, up 10 percent from $545,000 in August 2021. Single-family home prices in Salt Lake County peaked at $650,000 in May but are down 8 percent as of August.

Single-family home prices have increased 63 percent since the start of the pandemic, from March 2020 to May 2022, when prices climbed from $400,000 to more than $650,000 in Salt Lake County.

And it’s taking longer to sell a home. In August, the median number of days a home was on the market was 22, more than three times longer than a year ago.