Home prices stall out as sales plummet 37%

Homes for sale in McDonough. (Natrice Miller/natrice.miller@ajc.com)

Credit: Natrice Miller / Natrice.Miller@ajc.com

Credit: Natrice Miller / Natrice.Miller@ajc.com

Homes for sale in McDonough. (Natrice Miller/natrice.miller@ajc.com)

The weight of higher mortgage rates continued to drag the housing market earthward in December, with metro Atlanta home sales down 37% from a year earlier, according to the Georgia Multiple Listing Service.

After several years of double-digit increases in home prices, higher costs combined with unease about the economic future has meant months of deceleration and a virtual end to climbing values: In the region’s 12-country core, the median sales price of a home sold last month was $370,000, up just 2.8% from the same month of 2021, said John Ryan, chief marketing officer for the Georgia MLS.

The difference has been mortgage rates.

In the summer of 2021, the rate for the average 30-year, fixed-rate mortgage hit a low of 2.77%. But then the Federal Reserve started raising its benchmark rate in an effort to tame inflation and other rates rose in tandem.

Mortgage rates climbed above 7% in late autumn, adding hundreds of dollars a month to monthly payments for buyers of even modestly priced homes. Rates have backed off those peaks, but are still higher than they’ve been since 2002.

“People who a few months ago might have been able to afford a $450,000 home might now, because of higher interest rates, only be able to go to $370,000 or $380,000,” Ryan said.

Yet a sharp decline in prices isn’t in the cards, he said.

Unlike metros such as Phoenix and Las Vegas, where prices have been sliding, Atlanta still has fewer homes for sale than interested buyers, he said. “Inventory is still below the needs of the marketplace. And because of the low inventory, we probably won’t see dramatic price drops at all.”

The number of homes listed for sale — while still historically low — is 78% higher than it was a year ago, Ryan said.

Yet the market is not the same for all.

The availability of homes is not spread evenly, and the hardest homes to find are typically the lower-priced, said Kristen Jones, broker and owner of Re/Max Around Atlanta. “There is a lack of affordable housing inventory. We cannot sell what we do not have.”

Still, the overall market’s troubles could be temporary, she said. “Based on the information I have today, I think that (the first half of this year) will remain flat but expect things to pick up in the third and to have a fairly strong 2024.”

Nationally, as well as in Georgia, the tilt away from a seller’s market has meant that homes listed for sale are on the market longer and that sellers are a little less likely to get their asking price, according to HouseCanary, a San Francisco-based data company.

Statewide, the market cooled even more than in Atlanta with 45% fewer sales in December than a year earlier, the company said. The median sales price for Georgia was $329,900.

While the market’s long-term direction depends on the larger economy, the nation has thus far avoided recession — despite the Fed’s rate hikes. Job growth in December was surprisingly strong and unemployment historically low, according to a government report issued Friday.

So the trajectory of mortgage rates is a key signal to both buyers and sellers, said Emily Wheeler, chief operating officer for Village Premier Collection, Atlanta-based brokers.

While the Fed has not yet declared victory, there are signs that its anti-inflation campaign may be nearing an end, she said. “I see rates hovering between 6 and 8% for most of 2023. By year’s end, we may see rates decrease.”

Metro Atlanta housing market, December

Homes sold: 4,195

Median sales price: $370,000

Homes listed for sale: 11,452

Metro Atlanta housing in December, compared to year earlier

Number of sales: -36.5%

Change in price 2.8%

Homes listed for sale: 78.3%

Source: Georgia Multiple Listing Service