Home sales along the Wasatch Front have fallen further this year after tapering off dramatically through the end of 2022 with rising interest rates, but that trend has brought only patchy relief so far on sky-high prices.
January saw the smallest number of homes (590) change hands in a single month in Salt Lake County since January 2011, after the Great Recession had pinched that monthly volume to 571 homes. Sales last month were also nearly 36% below where combined volume of single-family homes, town homes and condominiums came in just a year before, when pandemic-ignited demand and historically low mortgage rates ramped up sales.
New data released this week shows similar declines across the wider five-county area centered on Salt Lake City as well, with sales down 41.5% in the final three months of 2022 compared to the previous year.
[Go to www.sltrib.com/homeprices to see home prices and sales along the Wasatch Front by ZIP code.]
Much of that is due to months of steady interest rate increases intended to dampen inflation, which left the average rate nationally on a 30-year mortgage at 6.77% as of Friday, almost twice what it was as 2022 began.
Rob Ockey, president of the Salt Lake Board of Realtors and a broker with Presidio Real Estate in Pleasant Grove, said demand remains strong for homes. “The limiting factor,” he said, “is higher interest rates.”
Despite signals from the Federal Reserve that more hikes are coming, Ockey predicted mortgage rates eventually will trend lower this year, possibly to about 5.5%, “which is still a great interest rate.” And with the outlook for a vibrant state economy, record low unemployment and steady population growth expected, Ockey said he was optimistic long term.
For now, though, rates on 30-year mortgages continue to hamper sales. That has improved the available inventory of homes and seems to be slowing price rises after an unprecedented climb but has not sent them into a free fall.
New numbers reveal the burst of homebuying that started in March 2020 with COVID-19’s onset and extended until May 2022 effectively pushed up home prices in Salt Lake County by nearly 60% — after almost a decade of steady gains.
“That,” Ockey said, “is not normal in any way whatsoever.”
Now, after peaking at about $650,000 in May, the median single-family home price in Utah’s most populous county reached $533,500 in January, down 9% from a year before. Other prices have started to drop significantly as well, according to new data, but not everywhere. And the Beehive State still has a shortage of affordable homes, much like the rest of the country.
Follow the bouncing interest rates
High housing costs and limited inventories have dampened home sales nationally, according to Taylor Marr, deputy chief economist for the real estate website Redfin, but those effects are gradually slowing.
A temporary moderation in mortgage rates in December and January lured some buyers back into the market, he said, but that didn’t last when February brought further signs inflation is persisting, prompting the prospect of more rate hikes from the Fed.
“The housing market took two steps forward in December and January,” Marr said, “but has taken one step back in February.”
January saw fewer homes listed for sale across the country than at any point since the start of the pandemic, he added, meaning that “many of the buyers who were still in the market had a tough time finding a home that met their needs.”
Utah’s current shortage of affordable homes is estimated at between 35,000 and 45,000 units statewide. And as interest rates have risen, the state’s homebuilders are pulling back on addressing that gap — monthly building permits for new private housing units have declined dramatically, from 3,811 in May to 1,776 in January, according to data from the Federal Reserve Bank of St. Louis.
“The big dogs have slashed their production significantly this year,” said Dejan Eskic, economist and housing researcher with the University of Utah’s Kem C. Gardner Policy Institute.
“I feel like January gave a sense of false hope,” Eskic said, “then the inflation readings took the wind out of those sails.
“But,” he added, “there are still deals out there. If you’re a buyer who can afford right now, you have the advantage.”
Ups, downs and where the bargains are
Home sales declined in all 85 ZIP codes along the Wasatch Front in the last three months of 2022, compared to the same period the prior year. Homes prices, however, rose in 47 of those 85 ZIP codes, new numbers show, and were lower or unchanged in the other 38.
Prices for all home types combined were up in the final quarter of 2022 compared to the previous year by 5.6% in Utah County, 3.2% in Weber County and 1.3% in Tooele County. They edged up only slightly in Salt Lake County and stayed level in Davis County.
Homes rose the most in price in the Avenues and Capitol Hill in Salt Lake County (84103), by about 24% to a median of $927,500. In Utah County, the biggest price gains were in Goshen (84633), at 19.5%, which pushed the median there to $413,300.
In Davis County, the largest gains were in Farmington (84025), yielding a median price there of $671,500. Eden (84310) in Weber County saw that county’s top median price jump by 21.3% to $958,500. Tooele County’s largest increases were in the city of Tooele (84074), up slightly less than 1% year over year, to a median of $430,000.
The latest data show Salt Lake County’s least expensive ZIP codes for home prices were 84104, which spans Glendale, with a median of $370,000, and 84118, covering Taylorsville and Kearns, at $387,000. Utah County’s relative bargains were to be found in Goshen (84633) with a median, again, of $413,300, and in Mona (84645), at a median of $422,000.
Davis County’s least expensive ZIP code was in Clearfield (84015) at $425,000, new numbers show, while in Weber County, that locale was in South Ogden (84403) at $358,3000. Tooele County’s lowest median was in the city of Tooele (84074) at $430,000.