Sept. 12, 2022

At least some homebuyers appear to be staying on the sidelines as closed sales in the city of Sioux Falls dropped 29.1 percent in August.

There were 265 sales for the month, down from 374 the same time last year, according to the Realtor Association of the Sioux Empire Inc.

New listings dropped 3.9 percent year-over-year, leaving the Sioux Falls market with a 2.1-month supply of homes. Supply is 33.6 percent less than the same time in 2021 but better than some times in 2022 when it was less than two months.

“Summer 2022 has been a season of change for the U.S. real estate market,” according to an analysis included with the report.

“With housing affordability at a 33-year low, existing-home sales have continued to soften nationwide, falling 5.9 percent month to month and 20.9 percent year over year as of last measure, according to the National Association of Realtors.”

Prices continue to trend up, with the average price of a home sold in August at $356,461, up 14.5 percent year over year. The median price of $315,500 was up 14.7 percent.

The average house in Sioux Falls spent 58 days on the market before selling, which is 11 days fewer than last year. Sellers received 101.6 percent of original list price, down just a bit from the 102.2 percent they averaged last year.

“Inflation, higher interest rates and fears of a potential recession have taken a toll on buyers and sellers this summer, leading many people to stay on the sidelines to see what will happen with the market,” the report said. “But some experts, including NAR chief economist Lawrence Yun, believe the worst of inflation may be over. Although sales prices remain up from this time last year, price growth is expected to moderate in the coming months.”

The pullback in demand has been particularly hard on homebuilders, causing new-home sales and construction to slow, the report said.

“Builder sentiment slid into negative territory in August as higher costs continue to impact buyers and builders alike,” it said.

“Buyer traffic has declined considerably this summer, with new-home sales down 29.6 percent nationally compared to a year ago and falling to their lowest level since 2016, according to the U.S. Census Bureau.”

Nationally, one in five homebuilders reported cutting prices in August to boost sales and limit cancellations, according to the National Association of Home Builders. In the Sioux Falls area, inventory of new construction is still down year over year, but at 27.1 percent, it’s also the segment that has lost the least inventory.