Since 2021, single-family home sales in Boone County have declined steadily year over year. In 2022, there was a 20 percent decline, followed by a 13 percent drop in 2023. The main reasons for the drop in sales were increased mortgage rates and home valuations.
Now that the first quarter of 2024 has already come and gone, what’s the condition of the market?
Single-family home sales in Boone County finished up over 1 percent for the first quarter. January and March posted sales gains, but February saw a 6 percent decline. The sales increase is attributed to new construction sales gains, while homes of existing properties were weaker than last year. The city of Columbia is another story; it was down almost 10 percent for the first quarter compared to the previous year, with existing sales also underperforming new construction.
Sales prices continue to increase at a high rate. In a healthy real estate market, valuation increases of 1 to 2 percent above inflation are preferable to the overall economy. Boone County has experienced a double-digit median price increase in the past few years. The pace of prices in 2023 did ease, with the median price increasing by 5 percent. However, with a dip in mortgage rates in December and January, buyers took advantage, pushing the median sales price up 15 percent during the first quarter of 2024.
One of the leading real estate statistics more people are paying attention to is the number of months of inventory on the market. This refers to the number of months for the current inventory of homes to sell based on the number of homes on the market on the last day of the month divided by the number of sales that month. This statistic determines whether the housing market is a buyers’ or sellers’ market.
A balanced market has five to six months’ worth of home inventory. A seller’s market is indicated when inventory is below, and a buyer’s market is signaled when inventory is above. The median inventory for the first quarter of 2024 was 2.50 months, which is only slightly above this time last year and indicates sellers have a strong advantage over buyers.
When you break the months of inventory down by price range, there are differences, and there have been months where the inventory number for higher-priced homes has been much more significant than for homes priced under $400k.
Our current market is stable and continues to rebound from the effects of COVID. We continue to struggle with low inventory, as owners of existing homes are reluctant to sell because they have such a low mortgage rate or a potential capital gains tax issue.
Many housing economists predicted home sales would increase double digits this year, based on the premise that mortgage rates would lower into 2024. This is looking less likely as the dropping inflation rate has stalled, and the world is grappling with turmoil in certain regions, so this could cause homes to be even or slightly below 2023.
Brian Toohey is the chief executive officer for the Columbia Board of REALTORS.
