Last quarter, sales volume saw its first year-over-year increase since the Federal Reserve initiated its aggressive rate hike campaign in April 2022. Although sales volume surged by over 12%, it still fell short of the second quarter’s 10-year average. The shrinking gap between sellers and buyers suggests that sellers are finally adjusting to market conditions, thereby boosting sales volume. Both median and average prices were down slightly compared from a year ago while price/square foot increased.
Sales indicators across the board improved from the 1st to 2nd quarters, largely fueled by a surge in signed contracts in March that subsequently closed during the latter period. March has stood out as the strongest month thus far this year for signed contracts. Surprisingly, June emerged as the second-best month of the year. The uptick in buyer activity last month could be attributed to interest rates dropping below 7% and an increasing number of renters facing record-high lease payments. Time will tell if this momentum will carry into the summer months.
Meanwhile, cash sales continue to dominate the market, accounting for nearly two-thirds of all closed sales in the past 9 months. This significant proportion of cash transactions, coupled with below average sales volume, indicates pent-up demand among buyers waiting to finance a purchase at lower interest rates.
Savvy buyers and investors understand a favorable market when they encounter one, and this market is no exception. Elevated interest rates have deterred many would-be buyers, thereby creating opportunities for active buyers to negotiate favorable price and terms. Once interest rates drop to a certain threshold, however, the market dynamics are posed to shift in favor of sellers, diminishing the leverage currently enjoyed by buyers.
