After three years of rising prices and dropping sales, real estate experts were hopeful that late summer would bring a cooling market, but a combination of buyer demand, the inventory squeeze and high interest rates has kept that from happening.
Just over 1,500 Maine homes changed hands in August, a decline of nearly 19% from the total in August 2022, according to data from the Maine Association of Realtors.
However, the statewide median sales price for homes sold last month was $372,000, a 9.4% increase over the price in August 2022, but a slight decline from the $380,000 median in July 2023. The median is the price at which half the homes sold for more money and half sold for less.
“As demand continues to outpace supply, the gap between new and outstanding mortgage interest rates is likely to keep the for-sale inventory constrained,” said Carmen McPhail, president of the Maine Association of Realtors.
Basically, people who purchased or refinanced during the pandemic were able to lock in very low interest rates – in December 2020, mortgage rates hit a historic low of 2.68% – so they’re not moving any time soon.
“Active buyers remain in the market, creating competition for move-in ready, attractively priced homes,” said McPhail, who is also an associate broker at United Country Lifestyle Properties of Maine.
That competition means it’s still an opportune time for sellers to list their homes, she said.
Houses that are priced too high might linger, but those that are priced appropriately are being snapped up.
Maine houses were on the market for an average of just eight days last month, up from seven days in July.
Inventory has been slowly creeping up throughout the busy summer season. In August, Maine Listings reported a 23% increase in inventory from July and the number of home sales beat the previous month by 13%.
It’s a positive sign, but it’s still not enough to meet buyer demand.
It’s a similar story across the country and supply needs to essentially double to combat the continuing increase in home prices, said Lawrence Yun, chief economist for the National Association of Realtors.
Nationally, sales fell 15.3% from August 2022, and prices rose by 3.7% to a median of $413,500, according to the National Association of Realtors.
In New England, home sales last month fell 22.6% from the year before, but prices rose 5.8% to $465,700.
While sales decreased significantly from the year before, month-to-month home sales have been relatively stable, Yun said.
“Mortgage rate changes will have a big impact over the short run, while job gains will have a steady, positive impact over the long run,” he said.
According to mortgage buyer Freddie Mac, the 30-year fixed-rate mortgage averaged 7.19% Thursday, among the highest rates in over 20 years.
Properties across the country remained on the market for much longer in August than those in Maine – 20 days, the same number of days as in July and an increase from 16 days in August 2022.
The Maine Association of Realtors also looks at three-month data in county-by-county comparisons to get a larger sample size of sale transactions, and both the number of sales and the sale price followed the same trend as the August home sales, with a 19.6% sales decrease and a 7.14% price increase from June through August 2023 compared to the same span the previous year.
Androscoggin County saw the biggest decrease in sales, with a 26.8% decline between June 1 and Aug. 31 this year versus the same period a year before. Cumberland County remains the most expensive of Maine’s 16 counties, with a median price of $550,000. Oxford County saw the biggest price increase, up 18% from $275,000 in the three-month span last year to $325,000 this year. Piscataquis bucked all trends with an almost 3% increase in sales and a 4.6% decrease in sales price, and Washington County also saw an 11.6% price dip. Prices in Waldo and Aroostook counties were nearly flat.
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