Metro Atlanta’s housing market last month downshifted the way it usually does in mid-summer, with higher mortgage rates applying an added brake.
Fewer than 4,900 homes were sold in the 12-county core of the region in July — down 16% from June — as the median price of a sale edged down slightly to $400,000, according to the Georgia Multiple Listing Service.
The market typically decelerates as the start of school approaches and families’ scramble to lock in new addresses eases. Moreover, the market has been in a year-long slide with home sales in July down 21% from the same month last year, according to Georgia MLS.
Mortgage rates have been hovering near their highest levels in two decades amid the Federal Reserve’s sustained efforts to tame inflation. That has been a problem at both ends of the supply-demand equation — with buyers facing headwinds and many would-be sellers deciding not to list their homes.
“It’s an issue especially for first-time homebuyers,” said Latoya Forbes, broker at Village Premier Collection, specializing in the city and the eastern suburbs. “Those rates make their monthly payments so much higher. There are absolutely some people staying out of the market because of it.”
Those on limited budgets who are intent on buying cannot be too choosy, she said. “You don’t have the luxury of saying, ‘I only want to stay on this side of town.’”
In the past year, rates have been higher than any time since the spring of 2002.
The average 30-year fixed-rate mortgage peaked at 7.08% interest last fall and, while it hasn’t hit that mark since, it’s been consistently flirting with 7%.
But it is not just buyers thinking about higher rates. Many current homeowners who might be in the market for a new home are thinking about the low rates they have now on their current mortgages and the higher cost of a loan on a new home.
Many of them held back from selling, which depresses inventory — that is, the numbers of homes listed for sale.
Buyers seem to be gritting their teeth and accepting the reality of higher rates, said Connie Spaziano, managing broker at Re/Max Around Atlanta, which has four northern metro locations. “We have more buyers than sellers. The real issue is low inventory.”
In a balanced market, in which buyers and sellers have roughly equal negotiating power, the number of homes for sale equals at least six months of sales. But inventory in metro Atlanta has been consistently less than two months of sales for more than a year.
There were 11% fewer listings than a year ago, when inventory was already historically sparse, according to MLS.
That shortfall has made newly built homes an ever-larger part of the picture, perhaps 30% of overall sales. And with listings few in number, new construction is often snapped up quickly.
Smith Douglas Homes expects to build 1,000 homes in metro Atlanta this year, said James Van Kirk, executive vice president of the Atlanta-based builder.
“This year is going much better than we anticipated,” he said. “We attribute a lot of the demand to a lack of re-sale inventory on the market.”
In late July, when homes went on sale at the company’s 27-house development in Dallas, in Paulding County about 30 miles northwest of Atlanta, four sold almost immediately at prices between $330,000 and $380,000, he said.
But buyers who want a home for less than $300,000 must go farther, Van Kirk said: Below the $300,000 line, the company has built townhomes in Jasper and houses in Dalton.
After the collapse of the housing bubble and the ensuing Great Recession, home construction virtually ceased. As the economy recovered, the region again started drawing transplants from around the county, but building has not caught up.
Amid strong job growth and a surge in home values, the Atlanta area remains affordable compared to many competing metros. According to real estate marketplace Zillow, the most common out-of-state location of wannabe buyers looking at metro Atlanta homes is much higher-priced New York.
According to national brokerage Redfin, the median home price in metro New York is $800,000.
Metro Atlanta housing report
Atlanta housing market*, in July
Number of homes sold: 4,827
Median sales price: $400,000
Number of listings: 10,654
Change from a year earlier
Number of homes sold: -21.2%
Median sales price: -0.6%
Number of listings -11.0%
Compared to the month before:
Number of homes sold: -16.1%
Median sales price: -2.2%
Number of listings: 4.0%
Mortgage rates, average 30-year mortgage
Highest: 18.39% (1981)
Lowest: 2.65% (2021)
Year ago: 4.99%
Two years ago: 2.77%
Five years ago: 4.59%
Ten years ago: 4.40%
Recent: 6.90%
*For the 12 counties centered on the city of Atlanta
Source: Georgia Multiple Listing Service, Federal Reserve Bank of St. Louis, Freddie Mac
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