Kentucky Housing Market Is Shifting
Home sellers cut prices as buyers cancel contracts and adjust to the new economic environment.
Seventy-three percent of Kentucky REALTORS® expect sellers to drop their asking price, while eighty-nine percent expect houses to stay on the market for longer, according to the July 2022 edition of the HousingIQ Survey of Kentucky REALTORS®.
“Higher rates, inflation, and uncertainty about the overall economy is weighing down buyers. 25% of the survey respondents reported that some of their buyers had canceled their contracts even as 47% reported that some sellers had cut their asking price by more than 5% in the last three months. Looking ahead, 47% of the respondents anticipate house prices to fall over the next twelve months,” said Vidur Dhanda, survey author.
In the latest Home Purchase Sentiment Index issue, which tabulates national consumer sentiment, Fannie Mae reported that the index had dropped to its lowest level since 2011. Only 17% said it’s a good time to buy a home. Additionally, the percentage of consumers believing it’s a good time to sell dropped nearly 10 points from May to 67% in July.
The Mortgage Bankers Association reported that the national weekly Purchase Index was 19 percent lower than a year ago.
Dhanda continued: “Although, the recent increase in inventory has offered buyers much needed relief, the drop in new listings and a slowdown in new construction will continue to keep inventory tight and prevent drastic price drops. Sellers, however, will need to be more flexible. 65% of the respondents expect a greater number of houses to sell below the asking price.”
COMPARED TO A YEAR AGO »
- 47% expect house prices to fall—a 20-point increase
- 89% expect houses to stay on the market for longer—a 29-point increase
- 73% expect greater price-cutting by home sellers—a 24-point increase
- 59% anticipate a decrease in foot traffic—a 44-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 continued its 5-month decline to close at 27. Compared to a year ago, the headline index is 11 points lower and close to its reading at the start of the pandemic. 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 also continued its 5-month decline and is 18 points lower from a year ago, reflecting expectations of home price decreases. The Buyer Power sub-index gained 3 points and is 18 points higher than last year, indicating the continued shift towards a buyer’s market. The Homeowner Stress sub-index decreased 1 point and is 3 points lower than a year ago.
The survey results are available here.