Despite interest rates at 23-year highs, Delaware home sales in August soared more than 17% compared with July, while the median sales price dipped slightly, about 1.5%.
When the average rate on a 30-year mortgage hit 7.48% on Aug. 21, that was the highest level since November 2000, according to Mortgage News Daily. The rate ticked higher to 7.49% on Aug. 22, retreated to 7.06% on Aug. 30, then rebounded to 7.47% as of Sept. 21.
But Delaware home buyers looked past current rates, expecting the opportunity to refinance their mortgage when rates drop, which could be next year. After the Federal Reserve didn’t increase interest rates at its September meeting, projections released by the Fed “showed the likelihood of one more increase this year, then two cuts in 2024,” according to business channel and website CNBC.
“Savvy homebuyers are focusing on quality of life over the temporary financial discomfort of higher interest rates,” said Chrissy Steele, president of the Delaware Association of Realtors. “They know interest rates fluctuate and they can refinance their loan when rates drop again.”
Sales last month totaled 1,235, up 17.84% from 1,048 in July.
Steele said as the summer vacation season nears an end, home buyers return to the market.
“This increase in buyer activity, in part, is attributed to families wanting to be settled into a new home before the school year begins,” she said.
August was the third-highest month for Delaware sales so far in 2023 after 1,302 in June and 1,238 in May.
However, compared with August 2022, sales dropped 16.38% from 1,477 to 1,235.
Delaware fared much better than the nation as a whole.
U.S. home sales dipped 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 15.30% from 4.77 million in August 2022.
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Median Delaware sales price slips in August but higher than 2022
The median sales price in Delaware fell to $372,632 in August, down 1.51% from $378,333 in July but higher than August 2022 by 2.84% when the median was $362,333.
Nationally, the median existing-home price in August was $407,100, up slightly, about 0.01%, from $406,700 in July, and higher by 1.93% from $399,000 in August 2022.
With housing data, the National Association of Realtors divides the U.S. into four regions, and all four posted year-over-year price increases.
“Home prices continue to march higher despite lower home sales,” said NAR chief economist Lawrence Yun said. “Supply needs to essentially double to moderate home price gains.”
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Supply of homes for sale lower than last year
Lack of inventory continues to be a problem across the country.
In Delaware, the supply of homes for sale in August was 2,734, better by 1.67% than the 2,689 in July but down 3.66% from 2,838 in August 2022.
New listings in August totaled 1,424, a 12.15% decrease compared with 1,621 in August 2022.
“We shouldn’t expect to see sales prices drop until supply is sufficient to meet the demand,” Steele said.
Nationwide, the housing inventory in August was 1.10 million units, a dip of 0.90% from 1.11 million units in July and a drop of 14.06% from 1.28 million in August 2022.
Reporter Ben Mace covers real estate and development news. Reach him at rmace@gannett.com.
