By james art Inventory and new listings for existing homes also rose in September in anticipation of interest rate cuts, but the recent spike in mortgage rates is causing some concern.
Reno’s median home price fell for the second month in a row in September after hitting a record high.
The median sales price for an existing home in Reno fell to $625,000 in September, a nearly 4 percent drop from August. The city recorded its second-highest average home price ever this month.
Reno broke a two-year record in July with an average sale price of $672,500.
Data from Sierra Nevada Realtors is limited to existing single-family homes and does not include condominiums, townhomes, modular homes and new homes.
Sparks was relatively unchanged from less than a percent from the previous month with a median home sale price of $555,000 in September. Sparks’ median home price has remained in that range for the past four months.
The combined Reno-Sparks median fell below $600,000 for the first time in three months to $588,250. Median home prices in Reno and Sparks are still up from a year ago.
Existing housing stock sees a boost in September
The supply of existing homes saw a boost from a year earlier — a potential bright spot for homebuyers hit by low housing supply in recent years.
Active inventory at Reno-Sparks rose to 1,038 units, an increase of nearly 20% from last September. New listings also rose more than 20% year-over-year to 500 units, while unit sales rose 13% to 406 units.
Inventory has been a big issue in Reno-Sparks since the area’s recovery from the Great Recession.
A construction freeze following the 2008 global financial crisis led to a lack of housing supply, which caused housing prices to rise as the economy recovered. Just as the Reno-Sparks housing market began to calm in 2019, the pandemic fueled a surge in housing demand as work-from-home demands led to an influx of new residents moving to the area from places like California.
While a series of interest rate hikes by the Federal Reserve beginning in 2022 cooled demand, it also affected inventory as more sellers decided to hold off on listing their homes on the market.
The Fed cut interest rates for the first time in September since it began raising them two years ago to fight inflation. The move is likely a factor in recent trends seen in the area, said Robert Bartsche, president of Sierra Nevada Realtors.
“This fluctuation in prices and sales reflects the shifting priorities of buyers amid the Fed’s recent rate cut,” Bartsche said.
Mortgage rates rise unexpectedly
One potential wild card would be mortgage rates, which rose unexpectedly after the Fed’s recent rate cut.
“Three straight weeks of rising mortgage rates has slowed borrower demand for mortgages — especially for refinances,” MBA President and CEO Bob Brookmitt said last Thursday.
“Mortgage applications fell for a third week in a row, led by a 26 percent drop in refinance activity.”
A rate hike may seem counterintuitive following the Fed’s rate cut. But while the Fed’s rate cut may affect the overall borrowing environment, mortgage rates are not directly tied to it.
Mortgage rates also fell a percentage point ahead of the Fed’s rate cut in anticipation of the Fed’s move. That means lower interest rates were already baked in even before the Fed cut rates.
Mortgage rates are still lower than they were compared to the peaks reached during the Fed’s rate hikes. MBA also expects some ups and downs with interest rates in the near future.
“More rate volatility and application changes are likely in the coming weeks,” Brooksmith said. “But the good news is that applications are still running above the levels of a year ago, when rates were much higher.”