April home sales drop as inventory falls
It’s prime homebuying season in Wisconsin, but buyers will still find lack of homes for sale and rising sale prices based on April housing market data released Thursday. A lack of inventory remains the key driver behind a 32.5% statewide decline in existing home sales in April versus April 2022, according to the Wisconsin Realtors Association. Milwaukee, Madison and Green Bay areas all saw home sales drop 31% to 36% in April versus April 2022. In the first four months of 2023, statewide home sales have declined 28.4%.
Inventory gauges the number of homes for sale at a given time based on the pace of sales in a housing market. Statewide, there are enough homes for sale to last 21⁄2 months, which is not a whole lot. Metro areas like Milwaukee, Green Bay and Appleton have even less inventory available.
Inventory helps determine whether the housing market favors buyers (more than six months of inventory), sellers (less than six months) or is balanced (right around six months). The current shortage of homes for sale makes this a heavy seller’s market, and buyers face strong competition and high prices.
WRA highlighted just how far away the state is from getting back to balanced: Wisconsin would need to add 21,000 listings, more than double the 15,100 homes currently for sale, to get back to balanced conditions.
“This represents an increase of 138% from the April total statewide inventory of 15,167 homes,” WRA noted.
The other key stat, 32.6%, is the decline in new homes put on the market statewide in the last year. Fewer listings means more buyers compete for homes on the market, pushing prices higher.
The state’s lack of inventory is even more pronounced in the $125,000 to $350,000 price range, a range generally considered affordable to younger families and first-time homebuyers. WRA reported only 1.7 months of inventory in the $125,000 to $200,000 range and two months of inventory in the $200,000 to $350,000 range.
The 30-year mortgage interest rate declined slightly since March to 6.39% in mid-May. It peaked in November at 7.08%.
The 15-year mortgage interest rate also declined to 5.75%. It peaked in November at 6.38%.
Joe Horning, chairman of the WRA board of directors, said in a media release the historic low interest rates in 2020 and 2021 is contributing to the ongoing inventory shortage.
“One reason housing inventory is so low is that current homeowners thinking about buying another home are likely sitting on very favorable mortgage rates, especially if they refinanced over the last couple of years,” Horning said. “Rates have more than doubled since hitting bottom at the end of 2020, and homeowners may be reluctant to give up those record-low rates to buy another home.”
The eight-county southeast region of the state saw, overall, a 32.6% decline in home sales in April, led by a 46.5% drop in Sheboygan County. Existing home sales in Milwaukee County declined 36.3% while sales in Ozaukee, Washington and Waukesha counties all declined 20-25%.
Year-to-date, the southeast region, which stretches from Sheboygan County to Kenosha County, has seen existing home sales decline almost 30% to 5,820 sales while the median purchase price has increased 8% to $270,000.
The southeast region’s inventory level remained unchanged at 2.3 months, though Milwaukee, Kenosha and Ozaukee County saw the volume of homes drop once again.