Delaware home sales flat in September, but better than national numbers. What to know.

Delaware home sales continue to be resilient in the face of higher prices and mortgage rates.

For existing homes — not new construction — September sales in Delaware totaled 1,233, nearly the same as August’s figure of 1,235 and higher than July sales of 1,048.

“This tells us that Delaware continues to be a good investment for home buyers despite the rising interest rates,” said Chrissy Steele, president of the Delaware Association of Realtors.

Delaware also fared better than the September sales number for the U.S. as a whole, down 1.98% from August, according to the National Association of Realtors.

However, compared to last year, the numbers fell in Delaware and nationwide. In the First State, sales were down 12.61% from 1,411 in September 2022, while nationally, sales dropped 15.38%.

“As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales,” said Lawrence Yun, National Association of Realtors chief economist.

Interest rates remain at 22-year high

Housing affordability is a combination of home prices and mortgage rates.

Mortgage rates are affected by the Federal Reserve which has been raising interest rates in an effort to lower inflation. After the fed funds rate was near zero during the pandemic, the Federal Reserve has increased the rate 11 times since March 2022.

The latest quarter-point hike on July 26 brought the fed funds rate to a range of 5.25% to 5.5%, a 22-year high. That’s what banks charge each other for overnight lending, and it affects rates on mortgages, credit cards and loans.

“The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains,” Yun said.

Home sales are usually closed with mortgage rates locked in one to two months earlier. The average rate on a 30-year, fixed-rate mortgage in July ranged from 7.03% to 7.22%, according to Mortgage News Daily. In August, rates varied from 7.10% to 7.48%.

Compare that to July 2022 when rates ranged from 5.15% to 5.84% or August 2022 when the range was 5.09% to 5.99%.

The average rate continued to rise in October, as high as 8.03%, and it was 7.87% as of Oct. 26.

An increase in mortgage interest rates from 7% to 8% will add an estimated $185 to a monthly mortgage payment, according to Experian.com, for a 30-year, fixed-rate mortgage on a $300,000 home with a 10% down payment.

The Federal Reserve’s next interest rate announcement is scheduled for Nov. 1 when no change is expected, according to financial magazine Forbes.com.

“A potential interest rate increase for December or later remains possible,” Forbes reported.

Steele said while rising interest rates continue to be a concern for the real estate industry, home buyers are taking advantage of creative contract terms and loan options, with an eye on refinancing later when rates drop.

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Home prices in Delaware climb faster than national rate

While interest rates are rising, the September median price of homes sold in Delaware increased 8.46% to $381,166 in compared to $351,423 in September 2022.

“We remain in a strong sellers market,” said Steele. “The higher sales prices indicate that home buyers are still writing competitive offers.”

Delaware’s median rose by a higher percentage than the national figure, which was a 2.82% increase to $394,300 in September, up from $383,500 in September 2022.

The National Association of Realtors divides the U.S. into four regions, and all four posted year-over-year price increases.

However, as a sign of cooling prices recently nationwide, the median price in September fell from $407,100 in August and from $406,700 in July.

The Delaware median sold price has fluctuated, climbing to $381,166 in September, up 2.29% from $372,632 in August; however, the August median was down 1.51% from $378,333 in July.

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Inventory of homes for sale rises in Delaware

The lack of homes for sale continues to be a problem across the country, but Delaware’s numbers are more promising than national figures.

Active inventory in Delaware rose 7.79% to 2,947 in September from 2,734 in August. Compared to September 2022, inventory was up 1.73% from 2,897.

“It's encouraging to see active listing inventory increase, and more homes enter the marketplace,” said Steele, “but it is still not enough to meet the large demand for Delaware home buyers.”

Nationally, the inventory in September rose 2.73% from August but was down 8.13% from a year ago.

The average number of days a home was on the market in Delaware was 28.33 in September, compared to 29 in August and 25.67 days in September 2022.

The U.S. average was 21 days in September, up from 20 in August and 19 days in September 2022.

Reporter Ben Mace covers real estate and development news. Reach him at rmace@gannett.com.

This article originally appeared on Delaware News Journal: Delaware home sales flat in September while prices rise more than 8%