Delaware Home Sales Surge Despite High Interest Rates
Despite interest rates being at a 23-year high, Delaware home sales experienced a significant increase of over 17% in August compared to July. However, the median sales price did see a slight dip of approximately 1.5%. This surge in sales comes as a surprise considering the average rate on a 30-year mortgage reached 7.48% on August 21, marking the highest level since November 2000, according to Mortgage News Daily.
Delaware home buyers seemed unfazed by these high rates, as they anticipated the opportunity to refinance their mortgage when rates eventually drop, possibly next year. The Federal Reserve’s decision not to increase interest rates at its September meeting further supported buyers’ optimism. Projections released by the Fed indicate that there may be one more increase this year, followed by two cuts in 2024, as reported by CNBC.
Chrissy Steele, president of the Delaware Association of Realtors, remarked that “savvy homebuyers are focusing on the quality of life over the temporary financial discomfort of higher interest rates.” Steele added that buyers understand that interest rates are subject to fluctuations and can refinance their loans when rates eventually decrease.
In August, Delaware saw a total of 1,235 home sales, representing a significant 17.84% increase from July’s 1,048 sales. Steele attributed this surge to families wanting to settle into a new home before the start of the school year, as the summer vacation season draws to a close. August, therefore, became the third-highest month for Delaware sales in 2023, coming after June’s 1,302 sales and May’s 1,238 sales.
However, compared to August 2022, home sales in Delaware experienced a decline of 16.38%, dropping from 1,477 to 1,235.
Delaware outperformed the national market, as U.S. home sales dipped by 0.74% in August to 4.04 million from an annual rate of 4.07 million in July, according to the National Association of Realtors. Year-over-year, sales fell by 15.30% from 4.77 million in August 2022.
The median sales price in Delaware for August stood at $372,632, representing a decrease of 1.51% from $378,333 in July. However, the median sales price remained 2.84% higher than in August 2022, when it was $362,333.
Nationally, the median existing-home price in August was $407,100, a slight increase of approximately 0.01% from $406,700 in July. Year-over-year, it saw a 1.93% increase from $399,000 in August 2022.
The National Association of Realtors divides the U.S. into four regions for housing data, with all four regions experiencing year-over-year price increases.
The supply of homes for sale continues to be a challenge across the country. In Delaware, the supply of homes for sale in August was 2,734, which showed a 1.67% improvement compared to July’s 2,689 but a decrease of 3.66% from August 2022’s 2,838.
New listings in August also decreased by 12.15% compared to August 2022, totaling 1,424.
Chrissy Steele emphasized that sales prices are unlikely to drop until there is sufficient supply to meet the demand, indicating the need for more housing inventory.
Nationwide, the housing inventory in August was at 1.10 million units, declining by 0.90% from 1.11 million units in July and dropping by 14.06% from 1.28 million in August 2022.
Overall, Delaware’s real estate market remains resilient despite the challenges posed by high interest rates and limited housing inventory.
[Reporter Ben Mace covers real estate and development news. Reach him at [email protected].]