Atlanta’s busy season for home-buying is off to a slow start

Buyers are more cautious amid higher mortgage rates and economic uncertainty, experts say.

A “for sale” sign in front of an Atlanta home earlier this year. Pending home sales in metro Atlanta were down about 21% in March as mortgage rates rose and buyers fret about the economy. (Arvin Temkar/AJC)

By Amy Wenk

1 hour ago

The spring home-buying season, when inventory and buyer demand typically surge, appears to be off to a slow start in metro Atlanta, experts say.

At the end of March, 4,897 homes were under contract, down about 21% from the same month a year ago, according to data from the Georgia Multiple Listing Service for the 12-county metro Atlanta region.

Though sales volume remained positive during the month, with closed home sales up about 5% year over year, what’s ahead looks less promising.

Signed contracts typically close in one or two months, offering a forward look at the housing market. And in January, February and March, those contract signings plummeted compared with the same months last year, per the Georgia MLS data.

“It’s nice to have seen closings volume hold up, however we anticipate within the next 30 to 60 days to see that trend reverse itself,” said Eugene James, chief market strategist for MarketNsight, an Atlanta-based housing data research and consulting firm.

“Basically, the spring selling season is off to a difficult start,” he later added.

The First Multiple Listing Service reported similar trends for March. Closed sales were up 2% year over year for the greater Atlanta area, while pending sales were down 6%, according to FMLS Chief Economist Leslie Appleton-Young.

Metro Atlanta saw home prices soar during the early years of the pandemic and borrowing costs also climbed as the Federal Reserve hiked interest rates to flight inflation.

But inflation remains hot amid international turmoil and the Fed has maintained a cautious outlook on its benchmark rates.

Energy prices have also been on the rise recently amid the war in Iran and borrowing costs for a home mortgage have recently ticked up after a slow decline.

Mortgage giant Freddie Mac reported Thursday the average rate for a 30-year fixed mortgage is 6.37%.

As a result, James with MarketNsight said he expects fewer buyers in the market this spring and a softer selling season.

Consumer sentiment recently sunk to a record low as people worry about higher prices for all goods and services. The cost of gasoline, for example, soared 21% from February to March as the war disrupted the global energy market.

John Ryan, chief marketing officer for Georgia MLS, said homebuyer demand hasn’t gone away but there is less urgency to make a decision.

“Buyers are approaching the market more cautiously and more measured,” he said. “They’re not quite sure where the economy is, what the world environment is.”

Emily Lane, brand director and head of portfolio innovation for Coca-Cola’s alcoholic beverages subsidiary Red Tree Beverages, is in the market for a new home for her family of four.

They are targeting Decatur-area neighborhoods including the popular Lake Claire and Oakhurst communities, and trying to keep their budget under $1.4 million.

Lane said she’s been looking about a year, and since October, has placed four or five offers on homes without success.

“We’ve had a mix of things happen,” she said. On homes she said she felt were overpriced and sitting on the market, the family put in offers below the listing price. But on homes more competitively priced, Lane’s offers have been outbid, she said.

“One of them, we did $125,000 over the asking price, and then we came in second out of four (bids),” she said.

A big challenge, she said, is a lack of homes for sale in her desired neighborhoods. “I personally feel like the spring inventory coming onto the market has been slower than last year,” she said.

Lane said if she felt more optimistic about the economy, the family would be more willing to stretch to the top of their budget. But economic uncertainty and wage growth concerns give them pause.

“In some years, you feel like your income is just going to keep growing. I don’t feel that way right now,” she said. “We are being very conservative in the amount of money we want to spend.”