Utah home sales fall 25% in September due to high mortgage rates

Oct 24, 2022, 7:00 PM | Updated: 7:07 pm

SALT LAKE CITY — September home sales in the Beehive State fell 25.5% compared to the same month last year, according to the Utah Association of Realtors.

“The market is trending slower,” said Adam Kirkham, the association’s vice president and an associate broker at Summit Sotheby’s. “The prices are coming down slightly and it’s mostly because of the higher interest rates.”

Even with the slowdown in sales, the year-over-year median home sales price in Utah increased by 6.5% to $490,000 in September. However, home prices have fallen since their peak of $539,000 in May of this year.

“We’re seeing price declines,” said Dejan Eskic with the Kem C. Gardner Policy Institute. “Across the Wasatch Front since May, we’ve seen about a 7% price decline. Statewide, about 9% since May. The market is correcting in order to move.”

Those looking to buy a home right now have more options and more bargaining power than they’ve had in recent years. The number of homes on the market in Utah increased 79.4% in September from a year earlier.

“In terms of prices, I think we’ll start seeing year-over-year declines come late winter and early spring,” Eskic said.

It’s now taking an average of 40 days for a home to go under contract, compared to 21 days last September.

Eskic and Kirkham said the big pause in buyer activity can be blamed on the rapid rise in mortgage interest rates — now averaging above 7% for a 30-year-fixed loan.

“I’ve been in this industry for 20 years and I’ve never seen an increase in rates this rapidly,” Kirkham said.

It’s not just the higher rates that have buyers sitting on the sidelines, but also the unpredictability with rate fluctuations.

“This is a rate-driven slowdown in the market,” Kirkham said. “So if rates were to settle in or even fall, we would actually see buyers come back into the market and prices could actually increase.”

“If interest rates were at 6%, or say, in the fives, we would see a lot more activity,” Eskic said.

According to the National Association of Realtors, monthly mortgage payments are more than 55% higher than a year ago.

“Affordability challenges have priced many buyers out of the market this year, and buyers who do succeed in purchasing a home are finding that the costs of homeownership have increased significantly,” said the September report from the Utah Association of Realtors.

Utah still has demand for housing because of the state’s strong job market and population growth. Eskic said current slowdown is causing homebuilders to pull back on permits.

“We’re going to see a lot less housing product coming online and that, in itself, puts us in a difficult situation, as well, as we grow,” Eskic said.

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Utah home sales fall 25% in September due to high mortgage rates