The red-hot Des Moines metro housing market is cooling off.
New figures the Des Moines Area Association of Realtors released Monday showed 1,452 homes were sold in the region in July, down 14.7% from the 1,703 sold in July 2021.
It was the biggest year-over-year decline for a single month since March 2019, when sales fell 19.2% from the March 2018 total.
The median home sale price in July was $272,990, down from $283,500 in June, the record high for the market. Sale prices can be volatile, but it was the first drop since February.
After rising from January to April, year-over-year sales volume also declined in May and June, by 2.9% and 3.5%, respectively.
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In general, the Des Moines market has slowed since a historic nine-month streak of double-digit sales increases from September 2020 to May 2021. That streak peaked with a 38.8% increase in December 2020.
The market cooled in part because mortgage rate rose sharply this spring, peaking above 6% in June for a 30-year mortgage. U.S. Bank was advertising a 5.125% rate Monday on a 30-year mortgage, down somewhat but a big jump from record-low rates under 3% last year.
According to Fortune, Moody’s Analytics is predicting nearly flat sales prices for the Des Moines metro in 2023, increasing about 1% for the year compared to nearly 11% in 2021 and more than 5% in 2020, according to the Realtors association’s annual numbers.
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Forecast: Des Moines metro home prices still expected to rise
The good news for central Iowa homeowners is that Des Moines remains in the minority of markets where Moody’s is forecasting any price increase for 2023. It calls for a price decline in 231 — more than half — the nation’s 414 largest housing markets, with some Florida metros seeing prices decrease by as much as 7%.
For Des Moines metro home shoppers, the median home sale price, even after its rapid rise, remains far below that of the nation in general. The nation’s median home price exceeded $400,000 this spring for the first time.
Also, Jen Stanbrough, president of the Des Moines Area Association of Realtors, pointed to an increase in housing inventory, saying in a statement that the number of properties on the market in the metro “continues to slowly rise with a 24% increase over July 2021.”
Despite the dramatic slowdown in sales last month, Realtor Gina Swanson of West Des Moines said she’s not seeing a market crash — just a bit less of a buying frenzy.
“It’s cooling a bit,” Swanson said. “It’s still a little bit on fire but the whole house isn’t burning right now.”
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She said demand remains strong and she has a long list of potential buyers looking for the right properties.
“When interest rates went up, people were kind of jolted with it for a few weeks,” she said. “But they realize it’s still better to buy than rent” with mortgage rates, though elevated, still well below historical highs.
“I think prices are going to slow down,” she said. “But I can almost guarantee housing prices will never go down. They just won’t accelerate as quickly.”
Bill Steiden is the business and investigative editor for the Register. Reach him at [email protected].