It is a seller’s market for home sales in Scott County and nationwide. Trouble is, there aren’t enough homes for sale to meet the demand.
In June, home sales jumped a mind-boggling 20.7 nationally, the biggest single-month increase since 1968, according to the National Association of Realtors (NAR) in a Wall Street Journal article.
By comparison, in June, Scott County’s residential home sales leaped a whopping 36 percent over the previous year while prices increased 6 percent. The number of days a house was on the market was about the same as a year before —47 days compared to 46 days in 2019, according to the Lexington-Bluegrass Association of Realtors (LBAR)
‘The housing market is hot, red hot,” said Lawrence Yun, chief economist for NAR. An industry trade group. “As we are coming out of the lockdown, we see this backlog of buyers trying to take advantage of record-low mortgage rates.
June’s pending sales in Scott County increased 23 percent over the previous June from 110 in June 2019 to 143 this year, according to LBAR. Nationally, the number of May pending home sales soared 44.3, according to NAR.
The hot residential market seems to be almost universal. LBAR covers 26 counties in central Kentucky and in that region, which includes Scott County, sales of single-family homes increased six percent year to date, while townhouses/condos sales increased 13 percent year over year.
“The pandemic certainly hasn’t cut into the demand for housing in Central Kentucky,” said Greg Buchanan, LBAR president. “It was predicted, as we moved through the quarantine, that the market would rebound quickly and the selling season would be pushed back a few months.
“That is certainly playing out locally as buyers are out in full force. However, inventory is suffering because of he demand level.”
Inventory, houses available for sale, are low throughout central Kentucky and especially in Scott County. The pandemic has intensified that shortage as prospective sellers are reluctant to have potential buyers look through their homes and builders have struggled getting supplies and workers during the shutdowns slowing construction. Months of inventory in central Kentucky has fallen to 1.6 months this year, compared to almost three months last year, a drop of 45 percent and down 24 percent from May when the inventory was 2.1 months. Scott County’s inventory is about two weeks for homes priced under $250,000 and there was not a single home listed in the $120,000-to-$140,000 price range in June. Typically a six-month supply of inventory is considered a balanced market.
Overall, in the 26 counties covered by LBAR, inventory has dropped 41 percent year over year and June marked the seventh straight month inventory levels fell in the region.
“Our market needs a more robust supply of homes to meet the demands of buyers who want to purchase real estate in the Central Kentucky region,” Buchanan said. “Sellers who may have temporarily put their plans on hold, or who didn’t think it was the right time, should strongly consider listing during the summer months.
“All the right conditions exist to make it an ideal time to sell.”
Mortgage rates are another driving factor. Buyers with almost perfect credit can get a rate as low as 2.8 percent, while the typical rate is at or near 3 percent, according to several Georgetown lenders. This is the first time since 1971 interest rates have fallen below 3 percent, almost 50 years ago, according to Freddie Mac. Mortgage applications are climbing with the unadjusted mortgage purchase index up 16 percent year-over-year, according to the Mortgage Bankers Association.
A one percent drop in the mortgage rate on a $200,000 home with a $160,000 mortgage reduces the monthly payment by almost $100. Over the course of a 30-year term, a one percent drop in interest rates equals about $30,000 less in interest costs.
In June, Scott County had 139 residential sales for $36.1 million with the average sales price at $259,999 and the median sales price at $232,500. Year-to-date, Scott County had 579 residential home sales for $141.4 million with the average sales price at $244,290 and the median sales price at $225,000, according to LBAR. In Central Kentucky, the median sales price for a residential home in June is $200,000 and the year-to-date median sales price is $190,000. Central Kentucky home prices have increased 16 consecutive months, states LBAR.
Despite the pandemic slowdown, central Kentucky new construction sales rose 84 percent over June, 2019 with 162 sales. New construction accounts for about 11.5 percent of the market, according to LBAR.
Mike Scogin can be reached at firstname.lastname@example.org.