Introduction: The Connecticut real estate market in July 2023 continued to grapple with affordability constraints, impacting both homebuyers and sellers. This report provides an overview of the state’s housing market, highlighting key trends, changes, and challenges faced by the industry.
1. Home Sales Decline Amid Rising Mortgage Rates Existing home sales in Connecticut saw a 3.3% month-over-month decline nationwide in July 2023, primarily due to the impact of soaring mortgage rates, which reached nearly 7% in recent months. Prospective buyers were hesitant to enter the market, delaying their home purchase plans.
2. Fear of Losing Low-Rate Mortgages Higher mortgage rates also deter existing homeowners from listing their properties for sale. Many were reluctant to give up the low-rate mortgages they secured a few years ago when interest rates were significantly lower, further contributing to the limited housing inventory.
3. Decrease in New Listings and Pending Sales New listings for single-family homes decreased by 26.9%, while townhouse/condo listings dropped by 20.3% in July 2023. Pending sales followed a similar trend, with single-family homes experiencing a 20.4% decrease, and townhouse/condo pending sales declining by 20.7%.
4. Severe Inventory Shortage Inventory levels continued to decrease significantly, with single-family home inventory down by 35.1% and townhouse/condo inventory down by 31.0%. This severe shortage of available homes further exacerbated affordability issues and intensified competition among buyers.
5. Median Sales Prices on the Rise Despite the drop in home sales, median sales prices remained near record highs. In July 2023, the median sales price for single-family homes increased by 6.4% to $430,000, while townhouse/condo median prices rose by 9.6% to $263,000. This price appreciation reflects the strong demand and limited supply in the market.
6. Days on Market and Supply Days on the market decreased slightly, with single-family homes experiencing a 3.4% decrease, while townhouse/condo properties saw a more significant 10.0% decrease. The months’ supply of inventory also decreased, down by 15.4% for single-family homes and 5.6% for townhouse/condo properties.
7. Competition in Affordable Markets The lack of inventory in more affordable markets has intensified competition among buyers. With only 3.1 months’ supply heading into July, the pressure on sales prices has been particularly strong in these areas.
8. Summary of Key Metrics for July 2023
- Change in Closed Sales (All Properties): -6.8%
- Change in Median Sales Price (All Properties): +6.8%
- Change in Homes for Sale (All Properties): -34.4%
Conclusion The Connecticut real estate market in July 2023 was marked by affordability constraints, leading to a decline in home sales and limited inventory. While median sales prices continued to rise, the competitive landscape made it challenging for both buyers and sellers. As mortgage rates remain a key factor, the market’s performance will depend on future interest rate trends and the ability of the industry to address these ongoing challenges.
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