March 7, 2022

In February, homebuyers in the Sioux Falls area paid on average 15 percent more than they did at the same time last year as inventory continues to drag.

The average sales price in the metro area was $323,101, according to the Realtor Association of the Sioux Empire Inc., up 15 percent year over year.

The median sales price at $284,800 showed an even sharper 17 percent increase.

Inventory fell 43 percent to a 1.3-month supply. Closed sales dropped 20 percent, though the metro area did show a 32 percent jump in pending sales.

Within the city of Sioux Falls itself, sales prices actually trended lower than the metro area as a whole. The average price was $318,092, up 14 percent, and the median price was $272,500, up 13 percent.

“Experts attribute the growth in sales to an uptick in mortgage interest rates as buyers rushed to lock down their home purchases before rates move higher,” the report said. “Mortgage rates have increased almost a full percentage point since December, with the average 30-year fixed-rate mortgage briefly exceeding 4 percent in February, the highest level since May 2019.”

Inventory was at an all-time low nationwide at the beginning of February and equivalent to a 1.6-month supply, the report said.

According to Lawrence Yun, chief economist at the National Association of Realtors, much of the current housing supply is concentrated at the upper end of the market, where inventory is increasing, while homes priced at the lower end of the market are quickly disappearing, leaving many first-time buyers behind.

“The shortage of homes is boosting demand even further, and with bidding wars common in many markets, it’s no surprise sales prices continue to soar,” the report said.

“With a shortage of existing homes for sale, many prospective buyers are turning to new construction for their next home purchase. But with rising construction costs, many buyers are finding they can’t afford to purchase a new home.”

Nearly seven out of 10 U.S. households can’t afford a new median-priced home, according to data recently released by the National Association of Home Builders, which found that 69 percent of U.S. households lack the income to qualify for a mortgage of $412,506 using standard underwriting criteria.