Utah’s spring home-buying season is off to an early start as bidding wars and intense buyer competition continue to define real estate markets in the state. With significant demand for homes right now, there are simply not enough for-sale properties to go around.
In fact, the inventory of homes for sale fell 64% from one year ago, according to February 2021 statistics from the Utah Association of Realtors. That means for about every three properties that were available last year, there is now only one.
In some counties, the drop was even steeper. In Washington, Utah and Tooele counties, for example, inventory fell 77%, 72% and 70% respectively.
The lack of home listings has kept sales lower than what they otherwise might be. Statewide, February home sales fell about 3% compared to a year ago. However, housing activity remains very strong. Even with the slight decline, it’s still Utah’s second-best February on record with Utah Realtors selling 3,449 properties.
For counties with at least 50 sales, the top performers were Uintah County with an 89% gain and Summit County with a 44% increase in home sales compared to last year.
“Despite the drop in home sales for February — which I would attribute to historically low inventory — the market is still outperforming pre-pandemic levels,” said Lawrence Yun, chief economist of the National Association of Realtors, in a press release about February U.S. existing home sales.
Not only are tight housing supplies constraining sales, but they are also pushing up prices.
In February, Utah home prices increased 15% to $385,000. That’s a gain of more than $50,000 compared to the median price of $334,675 in February 2020.
Along the Wasatch Back, home prices skyrocketed. In Summit County, home prices increased 40% from last year to a median of $1,212,500, and Wasatch County saw a gain of 27%.
Across the state, increases in prices and mortgage rates cut into affordability. The Utah Association of Realtors Housing Affordability Index feel 6% compared to last year.
Yun says the best solution for keeping home prices affordable is to provide more supply to the market through home-building.
“Home affordability is weakening,” Yun said. “Various stimulus packages are expected and they will indeed help, but an increase in inventory is the best way to address surging home costs.”
While interest rates have increased in recent weeks, Yun expects mortgage rates to remain in the low 3% range for the year. On Thursday, Freddie Mac said the weekly average rate on a 30-year fixed-rate mortgage was 3.17%. That’s lower than the 3.5% average last year at the same time but higher than the rates that were under 3% over the past few months.
“I still expect this year’s sales to be ahead of last year’s, and with more COVID-19 vaccinations being distributed and available to larger shares of the population, the nation is on the cusp of returning to a sense of normalcy,” Yun said, “Many Americans have been saving money and there’s a strong possibility that once the country fully reopens, those reserves will be unleashed on the economy.”
As buyers face unprecedented challenges, it’s more important than ever to work with a local Realtor who understands the market conditions. Your Realtor will help you craft a competitive offer and guide you through the pitfalls associated with this fast-moving market.
Visit UtahRealtors.com to find a directory of local Realtors who specialize in your area.