The Federal Reserve’s war on inflation and higher mortgage interest rates have hit Utah’s Wasatch Front housing market — hard.

“Like a wall,” said Steve Perry, president and CEO of the Salt Lake Board of Realtors.

Home sales of all housing types fell to 1,344 transactions in June in Salt Lake County — the lowest number of sales for a June month in a decade — and 27% lower than in June of last year, according to the Salt Lake Board of Realtors. On a 10-year average, a typical June month of home sales sees 1,741 closings.

It marks the 13th consecutive month of falling sales year over year, inching the Salt Lake County housing market closer to possibly seeing home prices — which reached staggering heights over the last two years, rising over 50% — level off or actually decline.

Dave Anderton, spokesman for the Salt Lake Board of Realtors, has said if the market sees at least 18 consistent months of falling sales, that could lead to actual home price declines. So far, the Salt Lake market is on a trajectory to meet that benchmark.

Perry said real estate agents are increasingly seeing motivated sellers drop their prices.

“Absolutely, the increase in prices has stopped,” he said. “We are looking at that leveling off and maybe coming down a tiny bit.”

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But as for now, home prices are still high. The median sales price for all housing types sold in June increased yet again — to $545,000. That’s up 16% from a median price of $470,000 in June of last year. For single-family homes, the median price was even higher in June: $628,000, up 14% from $550,000 a year ago.

Perry, in an interview with the Deseret News on Thursday, said the Fed’s effort to curb inflation has had a negative impact on buyers, who are getting priced out as high mortgage rates balloon monthly mortgage payments.

But there’s a silver lining to that. As more buyers back out of deals, that’s starting to shift the power dynamic, as sellers are now being slapped with the reality that pie-in-the-sky asking prices are out of touch with what buyers are actually willing to pay.

That shift, Perry said — along with falling home sales — is finally “rebalancing” market dynamics that have been so out of whack over the past two years amid the COVID-19 pandemic housing frenzy.

“The last two years we’ve had such a crazy market, where we’ve never seen something like that happen,” Perry said. “And now we’re finally at a point where we’re balancing it back out.”

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While it’s still a “seller’s market” — as evidenced by still-high home prices — Perry said that power is slowly shifting back to the buyer as sales slow.

“It’s forced sellers to have to make adjustments,” he said. “Buyers and sellers are now in a conflict of where, if the market is balancing and the sellers don’t just get everything they want, and the buyers aren’t just getting taken advantage of.”

For buyers, Perry said they now have more time, rather than just a few days, to decide whether to put an offer on a home. They now aren’t competing with “40 other offers” or the “ridiculous” levels of competition seen over the past two years.

“It’s kind of like a sigh of relief of, ‘OK, we’re done with all that craziness and we’re back to almost normal,’” Perry said.

Still, while inventory is ticking up amid falling sales, the U.S. and Utah are still facing a housing shortage.

A healthier, “normal” number of listings in Utah is about 13,000 home listings. In June the state only had 8,700 listings.

“Once we reach about 13,000 active listings, we’re a balanced market,” Perry said. “It’s not a buyer’s market or a seller’s market.”

If Utah starts to see 18,000 active listings, then it becomes “a buyers market, and the scales tip.”

“So we’re still down a good 5,000 houses in the state as far as the shortage goes,” Perry said. It would likely take several years of fairly aggressive homebuilding to close that gap — and homebuilders are trying.

“They’re doing the best they can in the fastest, safest way. They’re pulling the most permits they’ve ever pulled” over the last few months, he said.

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