Home prices increase but inventory shortage levels impact sales in Kentucky
SALES STILL TRACKING NEAR RECORD BREAKING PACE
The real estate market in Kentucky is seeing a rise in home prices for the first two months of the year while home sales have leveled off.
The median price rose 5 percent year-over-year to $119,523 in February compared to $113,833 in 2017. In January, the median price was up 4.6 percent to $122,433. This compares to Kentucky’s median price for all of 2017 of $128,589. Nationally, the median home sales price was $241,700 in February, a 5.9 percent increase over the past year and more than double the cost of a home in Kentucky.
The number of homes sold slid 2 percent, from 3,194 in February 2017 to 3,132 in 2018, a total of 62 properties, marking the third straight February with a decline. For the first two months of the year, however, homes sold were down only a total of 89.
The National Association of REALTORS® (NAR) said that sales rose 3 percent in February to a seasonally adjusted annual rate of 5.54 million after two straight months of declines. But a shortage of inventory is creating a challenge for would-be homebuyers.
“We are in an environment where more people are wanting to enter the market to purchase,” said Steve Cline, 2018 president of Kentucky REALTORS® (KYR). “Due to the lack of supply and affordability within the state, homes priced right are being snapped up quickly leaving qualified buyers in multiple offer situations and competing for the same property.”
The increase in prices can be attributed to a strong job market that has elevated demand and competition for available homes, especially since the interest rates have, up to this point, remained low by recent comparisons.
On the flip side, reflecting on the recent Bureau of Labor Statistics (BLS) report for March, Lawrence Yun, NAR chief economist, stated that job openings in the construction industry remain at a historic high mainly because of unusually cold weather around the country. If home builders can readily fill those jobs, then home construction significantly ramps up, and thereby brings more housing inventory to the market.
With the primary selling season coming up, the market may see a shift with more homes coming on the market, as long as higher mortgage rates don’t kick in.
“The slight decline experienced in sales for the first two months of the year still has 2018 near record highs for activity,” says Cline. “With the current homebuyer demand that I’m seeing in the market, the housing market should remain solid throughout the year.”
Kentucky REALTORS® is one of the largest and most influential associations in Kentucky. Founded in 1922, Kentucky REALTORS® represents more than 10,800 REALTORS® who are involved in all aspects of real estate, including residential and commercial real estate brokers, sales agents, developers, builders, property managers, office managers, appraisers and auctioneers.
To view housing statistics for the state, as reported to Kentucky REALTORS®, visit housingstats.kyrealtors.com.