Home sales experiencing a decline in Kentucky
Prices and inventory on the rise throughout the state
June home sales were at the lowest level for the month since 2014, with the number of transactions decreasing 5.4 percent compared to a year ago (5,504 in 2017 versus 5,207 in 2018). Even with the decline, total home sales for the first half of 2018 are still on track to be the second highest ever for Kentucky. Through June, home sales reached 25,253, only 2.7 percent (or 697 total homes) below the same period in 2017 when 25,950 homes sales were recorded.
Across the country, sales were down slightly for the month, with the National Association of REALTORS® (NAR) reporting a decrease of 2.2 percent when compared to June 2017.
Lawrence Yun, NAR chief economist, said closings, on the national front, fell on an annual basis for the fourth straight month as there continues to be a mismatch between the growing homebuyer demand in most of the country in relation to the actual pace of home sales, which are declining. He continued by saying the root cause is without a doubt the severe housing shortage with available properties going under contract very fast. This dynamic is, in turn, keeping home price growth elevated, pricing out would-be buyers and ultimately slowing sales.
The state’s housing inventory rose year-over-year for the first time in 2018, with 3.47 months of supply in June, slightly higher than it was in May 2018 and in June 2017. For the year, however, inventory is down 2.6 percent versus the same period in 2017. Nationally, housing inventory is 0.5 percent above a year ago, which is the first year-over-year increase since June 2015. Inventory levels across the U.S. stand at a 4.3 month supply.
“Properties are not staying around on the market very long,” said Steve Cline, the 2018 president of Kentucky REALTORS®. “Even though the inventory shortage didn’t show a statistical decline in Kentucky, homebuyer demand continues to strengthen in many markets and there just aren’t enough homes currently available to satisfy the demand, especially in the more affordable price ranges.”
This is evident when looking at the days on market (DOM), which shows how many days a home has been actively listed for sale. In Kentucky, days on market has dropped to just under 115 days for the first six months of the year, down 6.5 percent over 2017 when it was at 123 days. In June, DOM dropped to 107 days, from 115 in June 2017, a decrease of 7 percent. On the national level, the amount of time a property stayed on the market is surprisingly low, with NAR reporting 26 days in June, down from 28 days a year ago. Fifty-eight percent on homes sold in June across the country were on the market less than a month.
“The current level of homes available in Kentucky is far from what’s needed to satisfy demand levels,” added Cline. “And given the fact that the growing economy is bringing more potential buyers into the market and new home construction is still below where it needs to be, this demand is driving up prices in many parts of the state.”
The state’s median home price jumped to $144,271 in June, an 8 percent increase over June 2017 and 7.8 percent over the previous month. June marked only the second month (July 2017) where the median price exceeded the $140K threshold. For the year, the median home price increased to $131,433, up 6.4 percent from the first six months in 2017 when prices were $123,497. Nationally, the median home price in June reached $276,900, an all-time high, and up 5.2 percent from the same time last year when prices were $263,300. June marked the 76th straight month of year-over-year gains.
“Even with the upward momentum of prices for homes in Kentucky, they are still affordable when compared to the national picture,” said Cline. “In addition, reports are showing that a national trend of increasing supply may be playing out and if this proves to be true, prospective buyers will begin to see more choices and a softer price growth as we move forward.”
Kentucky REALTORS® is one of the largest and most influential associations in Kentucky. Founded in 1922, Kentucky REALTORS® represents more than 11,000 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.