Kentucky Housing Market Cools Off
Relief for buyers as sellers reduce prices and inventory inches up
Forty-three percent of Kentucky REALTORS® expect more sellers to reduce their asking price, while fifty-eight percent expect a house to stay on the market for longer, according to the April 2022 edition of the HousingIQ Survey of Kentucky REALTORS®.
“The market is turning as both buyers and sellers adjust to the changed economic situation. 50% of the survey respondents said some of their buyers had dropped out of the market because of higher mortgage rates while 41% expect a decrease in foot traffic,” said Vidur Dhanda, survey author. “As sellers lower their asking price and additional listings come to market, buyers should get some relief. However, inflation and steeper mortgage rates will continue to weigh on buyers.”
In the latest Home Purchase Sentiment Index issue, which tabulates national consumer sentiment, Fannie Mae reported that a survey-high 76% of respondents said it’s a bad time to buy a home, as the headline index touched its lowest level since May 2020.
The Mortgage Bankers Association reported that the national weekly Purchase Index was 15 percent lower than a year ago.
Dhanda continued: “Widespread concerns about an economic slowdown should not translate into fears about a housing market correction. Homeowner equity is at record highs and strong investor demand will readily absorb any excess supply. 47% of the survey respondents said that investors had outbid their individual buyers and 34% reported an increase in all-cash offers.”
COMPARED TO A YEAR AGO »
- 37% expect house prices to increase—a 23-point drop
- 58% expect houses to stay on the market for longer—a 31-point increase
- 43% expect greater price-cutting by home sellers—a 23-point increase
- 41% anticipate a decrease in foot traffic—a 30-point increase
Based on the monthly survey data, the HousingIQ/Kentucky REALTORS® Confidence Index provides a composite measure of expectations for the Kentucky housing market over the next year.
The HousingIQ/Kentucky REALTORS® Confidence Index dropped 5 points from last month to close at 38. Compared to a year ago, the headline index is 14 points lower. A value of 100 corresponds to all respondents agreeing that market conditions will improve. In contrast, 50 corresponds to respondents anticipating no change in market conditions.
The Price Expectation sub-index dropped 5 points from last month and is 19 points lower from a year ago, reflecting a sharp slowing down in price growth. The Buyer Power sub-index gained 11 points and is 27 points higher than last year, indicating that the hot sellers’ market is turning buyer-friendly. The Homeowner Stress sub-index was mostly unchanged and is 4 points lower than a year ago.
The survey results are available here.