As would-be homebuyers are getting turned off or priced out by climbing mortgage rates, the housing market is cooling, leading to a boost in home inventory.

As a result, Utah’s major metro area of Salt Lake City was one of the top housing markets in the nation to see the biggest boost to year-over-year inventory last month.

That’s according to the latest figures from RE/MAX, which released its May national housing market report Friday.

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By the numbers: Salt Lake City saw a 110.8% change in its year-over-year months supply of housing inventory from May 2021. The only other metro area that saw a bigger boost to inventory was another housing market that exploded during the pandemic: Coeur d’Alene, Idaho. There, the month’s supply of inventory increased by 111.9% year-over-year in May, according to RE/MAX.

  • Salt Lake City’s May 2022 month’s supply of inventory was 0.9, up from 0.4. That figure is the total number of residential properties listed for sale at the end of the month (current inventory) divided by the number of sales contracts signed (pending listings) during the month.
  • The numbers of closed homes sales are also 9.7% down in Salt Lake City compared to this time last year, but up 5.1% since April.
  • In Salt Lake City, the median home sales price is still well over half a million. The area’s median sales price was $551,413 in May, up 22.5% year over year.

So while inventory saw a boost as sales slow, that doesn’t mean there are suddenly plenty of homes to buy. Utah’s housing shortage persists, the market is still extremely tight, competition is still ruthless and prices remain as high as ever.

In Utah, climbing mortgage rates in April pushed the median monthly mortgage payment up by almost $1,000, up from about $1,629 from April 2021 to $2,256 last month, a 56% jump.

And that was before the Federal Reserve’s latest 0.75% rate increase announced Wednesday, the biggest single hike since 1994. As a result, the average 30-year fixed mortgage rate topped 6%, its highest level since before the 2008 financial crisis, up from just 3% at the start of the year. 

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Housing experts here have predicted rising rates will cause the Utah market to slow from what’s been a two-year frenzy — but that doesn’t mean a bubble is about to burst and home prices are about to fall.

Experts continue to remind us that Utah — and the nation — still face a housing shortage that’s in large part contributed to home price increases that have only accelerated amid the home-hungry frenzy that was sparked amid the COVID-19 pandemic as many Americans, set free by remote work, reevaluated their lives and decided to sell, buy or move.

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What’s happening to the U.S. housing market: Even though May is usually one of the busiest months for home sales, home sales across the U.S. were 8.5% lower than may of 2021, RE/MAX reported. However, sales are still up 5.8% over April of this year.

Inventory is growing slightly — May marked the second consecutive month to see U.S. housing inventory tick up this year. May is also the first month this year to top inventory levels compared to 2021.

  • May closed with 16.3% more homes for sale than in April of this year, and 2.2% more than May 2021. Months supply of inventory increased from 0.8 in April to 0.9 in May. However, that’s still lower than a year ago, when inventory was 1.0, RE/MAX reported.

“A decline in home sales isn’t entirely unexpected given the higher mortgage rate environment, but the gains in inventory are welcome news for buyers who are now starting to see a few more listings come onto the market during their home search,” Nick Bailey, president and CEO of RE/MAX said in a prepared statement Friday.

“Options in multi- and single-family housing are there that weren’t available just a few short months ago. Affordability remains a concern, but homebuyers are regaining some control which has been long overdue,” Bailey said.

Homebuyers may have slightly more inventory to choose from, but prices — you guessed it — are still climbing.

  • The U.S.’s median home sales price of $439,000 grew 1.2% over April’s 425,000 and was 13.2% higher than the $380,000 median price in May 2021.

Are offers still over asking? Yes, homes are still selling for well over asking prices.

  • The U.S.’s average close-to-list price ratio was 103% in May, meaning homes sold for 3% more than the asking price. That is slightly lower, however, than last month, when the average close-to-list price ratio was 104%, but slightly higher than this time last year, when the ratio was 102% in May of 2021.

How fast are homes selling? Across the U.S., homes spent an average of 23 days on the market in May. They sold three days faster last month, but also two days faster than they were selling in May of last year.