The Columbus housing market remains under fire in May but a growing number of signs indicate a slowdown ahead, especially in Northeast Ohio.
Columbus-area home sales jumped 7.5% in May from last year, but prices rose another 13% from a year ago. The average selling price of a Columbus-area home in May was $ 310,830, up from $ 275,000 last May.
Homes sold after an average 12-day listing, down from 14 days a year ago, and well below historical norms.
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Nationally, however, home sales fell 3.4% in May, the fourth consecutive month of declines, adding to the growth indication that the housing market is slowing as mortgage rates continue to rise.
“Home sales have basically returned to the levels they saw in 2019 – before the epidemic – after two years of a gangbuster show,” Lawrence Yun, chief economist at the National Association of Realtors, said in a news release.
“Given the housing affordability challenges from the sharp rise in mortgage rates this year, further sales declines in the coming months,” Yun added.
According to the Federal Mortgage Agency Freddie Mac, the average 30-year mortgage rate rose to 5.78% last week, more than double that of September and the highest rate since 2008.
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“Home sales are backed by positive demographics and a solid job market. The combination of fast rising mortgage rates and home prices is taking some steam out of the housing market,” David Berson, chief economist nationwide, wrote in the analysis. Tuesday sales figures.
“We expect existing home sales to slow down over the course of the year as mortgage rates rise, and this will ultimately help slow down home price gains,” Burson added.
In a separate report, Real Estate Information Service Atom Data Solutions identified the markets most vulnerable to declines in terms of affordability, number of “under water” assets, foreclosure rates and unemployment.
While communities in New Jersey, Illinois, and California are at greater risk, other areas, including Northeast Ohio, are behind.
According to Attom, Cuyahoga, Lorain and Lake Counties, all in the Cleveland area, are within the top 30 counties at risk of price declines. Other Ohio counties in the Top 100 include Trumbull and Mahoning (Youngstown), Lucas (Toledo), Portage and Summit (Akron), Stark (Canton), Columbia (Salem) and Montgomery (Dayton).
Ohio County is Wayne with the least risk of housing collapse, which includes Wooster.
“While the housing market has been exceptionally strong over the past few years, that does not mean there are no areas of potential vulnerability if economic conditions continue to weaken,” said Rick Sharga, executive vice president of market intelligence at Atom. “Housing markets with poor affordability and relatively high unemployment, underwater loans and foreclosure activity may be at risk if we enter recession or face a more modest decline.”
Still, nationwide Berson house prices are not expected to actually decline, despite growing signs the economy is heading for a recession.
“If the economy is in recession over the next 24 months, sales will be bigger and home price gains will slow down more quickly. But in the absence of a deep and sustained recession, home sales should not fall.