In this month’s SLC Homes News, we investigate the mystery of the declining Salt Lake County housing inventory. First, let’s see what clues we can gather.
The scene is set: As we approach the spring selling season, we’re seeing a continued decrease in the number of single family homes for sale in Salt Lake County and an increase in the number of homes under contact.
Since late October 2022, we’ve gone from 8 weeks of inventory of homes for sale, to just 4 weeks of inventory now. It seems that the increase in homes under contract which started at the beginning of this year is a contributing factor to the declining inventory, but not the only one because inventory was decreasing 10 weeks before the number of homes under contract started increasing.
The 30-year mortgage rate has gone from a peak of 7% in late October, to a range of 6% to 6.5% since early December. With interest rates slightly more favorable and any further substantial decline in rates being unlikely for the next few months, it appears that more buyers are starting their home search now. That and the beginning of a new year, which almost always brings new buyers into the market, are likely contributing factors to more homes going under contract.
You’d think with decreasing inventory that there must be more sales taking place. As I mentioned above, activity is picking up since the first of the year, but the number of homes sold is way down from last year at this time with just 550 homes sold in December 2022 compared to 1,023 homes sold in December 2021, a 46% decrease, and 418 homes sold in January 2023 compared to 623 in January 2022, down 33%.
Homes are taking much longer to sell too. Last year at this time the average single family home in Salt Lake County was on the market for 6 days before it went under contract, by July it took 15 days, by October 36 days, by January 2023 53 days, and so far in February it’s taking 55 days.
You can see this in a sampling I did of homes under contract in Salt Lake City. There are currently 196 homes under contract in SLC, 60 (31%) of those homes went under contract in 10 days or less of being on the market, 79 (40%) of those homes were on the market for 60 days or more and 46 (23%) were on the market for 100 days or more before they went under contract. This reinforces what we’re seeing in the number of days on the market.
I also looked back at a ten day sample of homes currently for sale and under contract in Salt Lake City to see what is happening there. There were 50 homes listed for sale in the last ten days, and 25 (50%) of those homes went under contract. So not all new listings are selling fast.
I mentioned earlier that the number of single family homes sold is very low right now, and in fact it was at a 14 year low in the second half of 2022, but what about the supply side of things?
In the second half of 2022, there were 5,385 single family homes listed for sale in Salt Lake County. That’s 21% below the 6,492 homes listed in 2021 and 33% less than the 7,179 homes listed in 2020. If you look at the graph below which shows the number of homes listed in the third and fourth quarters of ever year, you’ll see that in the second half of 2022, we saw the fewest homes listed for sale in Salt Lake County since the Wasatch Front Regional MLS started tracking this in 1998.
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