July 2023 St. Louis Real Estate Market Update
Affordability constraints have continued to limit homebuying activity this summer, with existing-home sales falling 3.3% month-over-month nationwide as of the last measure, according to the National Association of REALTORS® (NAR). Mortgage rates have approached 7% in recent months, leading many prospective buyers to put their home purchase plans temporarily on hold. But higher rates have also kept many existing homeowners from listing their homes for fear of giving up the low-rate mortgages they locked in a few years ago when rates were significantly lower. The median home sale price in St. Louis continued to increase for the 6th consecutive month in 2023 with July up by 3.5% compared to July 2022. Year-to-date, the median sale price is at $277,500, while July 2023 clocked in at $300,000.
If you’ve been on the sidelines hoping to sell before the market runs out of gas, you may be getting short on time. The market has become far less predictable, though still very favorable for sellers, as interest rates have inched upward (see my observations below).
Sellers are still receiving more than their asking price (103.2%) due to extremely low inventory, but interest rate hikes are finally making buyers pump the brakes. The average mortgage rate in 2021 was 2.96%, making the payment on a $300,000 home with 20% down just $1,007/mo before taxes and insurance. Today, that same home would cost $1,699 at a 7.625% interest rate on a 30-year loan. That’s a 68% increase!
📆 If you’re thinking of buying or selling and want to discuss your options, click here to schedule a no-pressure, no-obligation meeting with me. We can meet in person, via Zoom, or have a good old-fashioned phone call!
Quick Facts
-14.3%
Change in Closed Sales
-3.6%
Change in Median Sale Price
-19.3%
Change in Homes for Sale
What the Data Tell Us
1. Median sale price has exploded
The housing market was already moving up before the COVID boom but the chart below illustrates the explosive moves that started just before and continued through the pandemic. With interest rates over 7% and the inflation rate at its highest since 1981, the market feels ready for a correction. I expect it will move sideways for some time unless the Federal Reserve continues to increase rates or the stock market sees a major correction.
2. St. Louis homes are affordable, comparatively
Despite a drop in existing-home sales, home prices have remained near record highs, with a national median sales price of $410,200 as of last measure, 0.9% below the all-time high of $413,800 recorded in June 2022, according to NAR. With only 3.1 months’ supply heading into July, the lack of inventory has boosted competition among buyers and put upward pressure on sales prices, especially in more affordable markets like St. Louis, where competition for homes remains particularly strong.
3. Interest rates are suppressing inventory
With interest rates over 7%, many would-be buyers can’t justify giving up the sub-3% rate they locked in a few years ago on their current home. With fewer people selling due to high interest rates, we may see supply constrict even further which would cause prices to climb higher still.
My Observations in the Field
Buyers must compete for the best listings. July showed far less showing activity on our listings than expected, but still 2 out of 10 sold for 117% or more over the asking price. The majority sold between 100-106%, and one sold for 100%.
Sellers are anxious. With rising interest rates putting affordability out of reach for many families, sellers are starting to worry that they’ve missed their opportunity to cash in on historically high housing prices. If you plan to sell in the near future I encourage you to consider doing so sooner than later, even if it means making alternate living arrangements.
Buyers are pivoting. Those who entered the market with intentions of buying their dream home while rates were already on the rise are now finding the home they wanted is out of reach, or that buying it at today’s rates is no longer attractive. More and more clients are considering a ‘tweener move;’ buying something now that’s smaller or less ideally located, with plans to upgrade once rates start to come down.
Terms are softening. It has been customary, since the pandemic, to make offers with limited contingencies. Buyers have been removing the option to negotiate after inspections, to renegotiate in the event of an appraisal below the purchase price, and waiving the ability to terminate if they can’t get their loan. I’ve begun to see and make more offers that retain these contingencies or limit them in some way instead of entirely removing them.
Housing Market Statistics,
St. Louis City & County (combined)
MEDIAN SALE PRICE
The median home sale price in St. Louis in July 2023 increased by 3.5% to $300,000 when compared to the same period of the prior year. Year-to-date the median sale price has increased 3.7% to $277,500.
PENDING SALES
The number of pending home sales in St. Louis in July 2023 decreased by -0.2% to 1,696 when compared to the same period of the prior year. Year-to-date, pending sales have decreased by -12.9%.
UNITS FOR SALE
The number of units for sale in the St. Louis housing market in July 2023 has decreased by -19.6% to 2,340 units when compared to the same period of the prior year.
CLOSED SALES
The number of closed home sales in St. Louis in July 2023 decreased by -14% to 1,556 when compared to the same period of the prior year. Year-to-date, closed sales have decreased -16.8%.
MONTHS OF INVENTORY
The number of months of inventory (i.e. supply) in the St. Louis housing market in July 2023 flat at 1.7 months when compared to the same period of the prior year.
DAYS ON MARKET
The number of days on market in St. Louis for July 2023 is up by 21.1% to 23 days. Days on market year to date is up by 26.1% to 29.
PERCENT OF LIST PRICE RECEIVED
The percent of list price received by sellers in St. Louis for July 2023 has decreased by -0.2% to 103.2% when compared to the same period of the prior year. Year-to-date the percent of list price received has decreased by -2.1% to 101.6%.
This residential real estate data is representative of single family homes in St. Louis City & County combined, and is provided by Mid America Regional Information Systems. Some numbers may be rounded to the nearest whole number.
