The economy tightening and home sales continuing to decline does not necessarily signal a housing bubble
July 15, 2022
CHARLOTTE, N.C. — Sales across the 16-county Charlotte housing market continued to slow in June, falling 13.6 percent compared to June 2021, with 5,041 homes sold, marking six consecutive months of year-over-year declines. Sales compared to May 2022 however were up 8.7 percent, showing buyers still actively purchasing within the region, even as rising rates, prices and economic concerns put a damper on homebuying activity.
At midyear, the Charlotte region racked up more than 26,500 home sales, which is a decline of 5.3 percent when compared to the frenzied and competitive sales environment during the first half of 2021. If the current sales pace continues in the second half of the year, yearend figures could put the Charlotte market in the range of sales seen at yearend 2019. Housing statistics included in this report are completed transactions that include single-family and condo/townhomes only, according to data from Canopy MLS.
Buyer demand as displayed by pending sales or contracts, declined 12.3 percent year-over-year as 4,710 homes went under contract during the month of June 2022. Contract activity compared to the previous month (May 2022) also declined 10.1 percent month-over-month, signaling weaker sales over the next few months.
New listings increased for a second consecutive month in June, rising 4.1 percent year-over-year with a little more than 6,500 new listings. Compared to the previous month new listings are up 7.5 percent, which will positively impact inventory while helping buyers with more choices. Year-to-date figures show sellers have added 31,800 new listings to the market over the last six months, which is nearly on par with new listing activity experienced in the first half of 2021, down only 2.7 percent. Should this level of activity continue, inventory and supply should push the market somewhat closer to equilibrium, and neither a seller’s nor buyer’s market.
“We expect to see sales decline further as buyer demand cools due to the affordability challenges from rising rates and continued inflation challenges, said Lee Allen, Canopy Realtor® Association/Canopy MLS president. “The slowing of sales may provide buyers with mor inventory to choose from. The increase in inventory is a silver lining of the challenges buyers face. With that said, we will still need to see supply levels rise substantially overtime, in order to really cool home price appreciation.”
In June, inventory increased 12.7 percent year-over-year, leaving 5,334 homes for sale at report time (July 5, 2022) or 1.1 month of supply of homes for sale. Last June, the region had only 30 days of supply. Here at mid-July, the region’s inventory shows 5,581 homes for sale, which is an additional 247 homes added to inventory since July 5, 2022 or 1.2 months of supply.
Still, critically low inventory across the region has pressured prices, which continues to erode affordability. Both the median sales price ($400,000) and the average sales price ($476,168) increased 19.4 percent and 17.5 percent year-over-year respectively, while the average list price increased 17.9 percent year-over-year to $488,408. However, the original list price to sales price measure decreased a bit in June, to 101.9 percent, but still showed sellers receiving more than asking price this past month.
“Allen continues, “The affordability issues our market is facing does not point to a housing bubble or market collapse. Real estate bubbles occur when speculation overtakes a market and prices rise, not because demand is increasing, but because buyers believe prices will continue to rise in the future, increasing the value of their investment and the potential to “flip” homes. That type of speculation is not what is driving housing demand or the price increases our market is experiencing. Historically, there has not been enough housing built in Charlotte to keep up with the unprecedented demand that we’ve seen over the past few years and so supply is the major contributing factor in home price appreciation.”
Time on market continues to show homes selling very quickly, leaving buyers little time to negotiate. List to close fell to 70 days in June 2022, while days on market, the metric that accrues for “Active” and “Under-contract-show” statuses, showed homes averaged 14 days on market until sale, which is unchanged compared to last June.
Canopy Realtor® Association provides monthly reports on residential real estate market activity for the Charlotte region based on data from Canopy MLS. The Charlotte region, which this report is based on, includes 12 counties in North Carolina and four counties in South Carolina.
For more residential-housing market statistics, visit www.CarolinaHome.com and click on “Market Data.” For an interview with 2022 Association/Canopy MLS President Lee Allen, Realtor®/Broker-in-charge with RE/MAX Executive, please contact Kim Walker.
The Canopy Realtor® Association is a trade association that provides its more than 16,000 Realtor® members with the resources and services they need to conduct ethical, professional, successful and profitable businesses. The Association is dedicated to being the region's primary resource for residential real estate information. The Association operates Canopy MLS, which has more than 21,000 subscribers and is the private cooperative Realtors® use for access to tens of thousands of residential listings in a 16-county service area, including Charlotte, 13 counties in the mountains of North Carolina as well as the Rock Hill area of South Carolina.
Original Publish Date: 7/15/2022