March 9, 2023

Home sales dropped more than 30 percent year over year in Sioux Falls last month, leading to a rare decline in price.

There were 201 closed home sales in the city in February, compared with 290 the same time in 2022, according to the Realtor Association of the Sioux Empire Inc.

The average price of a home sold was $308,071, which was a 4 percent drop year over year. The median price went up 4.8 percent to $289,000.

“Affordability constraints continue to limit homebuyer activity overall, with existing home sales declining for the 12th consecutive month, according to the National Association of Realtors,” according to an analysis included with the report.

“With buyer demand down from peak levels, home price growth has continued to slow nationwide, although prices remain up from a year ago. Sellers have been increasingly cutting prices and offering sales incentives in an attempt to attract buyers, who have continued to struggle with affordability challenges this winter.”

The average house did sell faster this year than last, though, spending 78 days on the market compared with 85 days. Sellers received 99 percent of their original list price on average, compared with 101.8 percent a year ago.

“The slight decline in mortgage rates earlier this year convinced some buyers to come off the sidelines, but with rates ticking up again in recent weeks, buyers are once again pulling back, causing sales activity to remain down heading into spring,” the report said.

Sioux Falls ended the month with an inventory of 556 homes, compared with 670 this time last year — a 17 percent drop. However, in new construction, inventory is up 17.6 percent.

The Sioux Falls market overall has a 2.2-month supply of homes for sale, identical to last year.

“Purchases of new single-family homes increased 7.2 percent month over month as of last measure, exceeding economists’ expectations and rising to the highest level in nearly a year, according to the U.S. Census Bureau,” the report said.

“The limited supply of existing homes on the market, along with lower mortgage interest rates, softening sales prices and a rise in the number of builders offering sales incentives, helped boost new-home purchases, causing builder confidence to increase for the second consecutive month in February.”

For the 12-month period spanning March 2022 through February 2023, pending sales in the Sioux Falls region were down 14.6 percent. The price range with the largest gain in sales was $900,000 to $1 million at 76.5 percent.