Home sales down, down, down

Plunging first-quarter homes sales indicate the housing market has fallen into recession as the spring selling season begins.
0623 Ec By The Numbers

The Federal Reserve’s program to slow down the economy by hiking interest rates is doing its intended damage based on first quarter home sales regionally, statewide, and nationally — although continuing low inventory also was a factor in south-central Wisconsin.

The number of home sales from January through March declined across the region, according to the Realtors Association of South Central Wisconsin. Homes sales were down 21.5% in Dane County, 18.8% in Sauk County, 15.2% in Rock County, 25.7% in Green Lake, Marquette, and Waushara counties combined, and 21.6% overall.

At the moment, there is one silver lining, albeit a thin one. Since new listing activity slightly outpaced sales in the first quarter — 1,336 new listings versus 987 sales — March saw a modest increase in Dane County’s inventory. While a balanced market is considered three to five months, which is the number of months it would take to sell all the existing listings at the current pace, Dane County had a 0.6 months’ supply of homes on the market at the end of Q1 2023.

0623 Ec RoundtableStatewide, first quarter home sales were down 27.4%, from 14,915 to 10,834, according to the Wisconsin Realtors Association. Taking a one-month snapshot for March, the state association’s national counterpart says the start of the crucial home-selling season saw the sale of existing homes fall to 4.4 million, or 2.4% from the previous month, across the U.S. Compared to March 2022, sales of existing homes were down 22% nationally.

After the home sales reports were issued in mid-April, the Federal Reserve raised its Fed funds rate, which influences mortgage rates and rates on various consumer loans, by another 25 basis points. It also issued guidance that suggests it will put future rate increases on hold.

An upbeat note was issued by David Stark, president of Stark Company Realtors, in his April 21 Market Source Newsletter. While acknowledging that the local market remains constrained by the lack of new listings, Stark added that demand is still very high and prices are solid. “Once the Fed gets out of the way, our market should be performing well once again,” he notes.