July 2023 Home Sales Report Wisconsin Inventory Remains Tight, Pushing Sales Down and Prices Up Date: August 24, 2023
July 2023 at a glance
Following recent
patterns, weak inventories limited sales of existing homes and drove prices up
significantly. July 2023 closings slid 20.8% compared to July 2022, and the
median price rose 7.5% to $300,000. This was the second straight month where
the statewide median price was at or above the $300,000 mark.
The statewide
picture on a year-to-date basis is consistent with the monthly data. Existing
home sales for the first seven months of 2023 were 23.6% lower than the
January-through-July period of 2022, and the median price rose 8.4% to $285,000
over that same period.
Although months
of available supply improved slightly relative to July 2022, both new listings
and total listings continued to fall in July. New listings dropped 17.7% over
the past 12 months, and total listings fell 20.7%.
The regional
picture was mixed. Sales were down by double digits in all regions, between
16.7% and 25.2% compared to July 2022, but regional price appreciation was more
variable. The more rural regions saw flat to modest increases in median prices
over the last 12 months; for example, the West region was down 0.8%, the North
region was unchanged and the Central region was up 3.5%. In contrast, compared
to July 2022, median prices rose 6.1% in the South Central region, they
increased 6.9% in the Southeast region, and they rose 14.6% in the Northeast
region.
Interestingly,
months of inventory saw the largest improvement in rural areas over the past 12
months, increasing from 4.3 months in July 2022 to 4.8 months in July 2023. In
contrast, large metropolitan counties saw months of supply unchanged at 2.9
months, and inventory improved slightly in medium-sized towns; for example,
micropolitan counties improved from 3.2 months to 3.4 months.
The Wisconsin Housing Affordability index shows the
percent of the median-priced home a buyer with median family income qualifies
to purchase, assuming 20% down and the remaining balance financed with a
30-year fixed-rate mortgage at current rates. For the second straight month,
the index stood at 125, which is its lowest level since the WRA began tracking
this measure in 2009. This is a 15.5% reduction in the index over the last
year.
Analysis from the experts
Challenges especially high in urban areas
“A
balanced market is six months of supply, and so it was good to see some
movement toward that benchmark in our rural counties. However, we still have
very low inventory levels in our urban areas, which is making it difficult for
younger households to effectively compete for homes.”
Joe Horning, 2023 Chairman of the Board of Directors, Wisconsin REALTORS® Association
The Fed's next move is uncertain
“Headline
inflation ticked up slightly to an annual rate of 3.2% in July, although the
less volatile core inflation measure that excludes food and energy fell to 4.7%
— its lowest level since October 2021. The Fed is still concerned that
inflation remains well above its 2% target, and the Fed raised short-term rates
in July to the highest level in 22 years. While there is disagreement among Fed
officials as to whether more rate increases will be necessary, what is clear is
that we are not likely to see rate cuts in the foreseeable future.”
Dave Clark, Professor Emeritus of Economics and WRA Consultant
Mortgage rates inching upward
“Most
buyers rely on financing in their purchase of a home, and this is especially
true for first-time buyers. Unfortunately, rates have been moving in the wrong
direction, with average 30-year rates at 6.84% in July. This is near the peak
levels of last October when they averaged 6.9%. Hopefully we see improvement in
the next few months.”
Michael Theo, President & CEO, Wisconsin REALTORS® Association