Utah home prices see slower growth amid national affordability crisis

SALT LAKE CITY — In May, the median price for a home on the market in Utah was $522,754, a 2.4% increase from a year ago, reports indicate. The West and Northeast are the least affordable areas of the country for Americans to purchase a home. What gives?

"Twenty percent of aspiring homeowners think they will never be able to save enough to purchase a home," according to Bankrate. "The annual salary needed to purchase a median-priced home has increased over 50% in 22 states since January 2020 — with Montana, Utah, Tennessee, South Carolina and Arizona experiencing the biggest jumps."

There is a bit of light at the end of the tunnel — May saw a slower price growth rate after an increase in the number of houses available on the market. Still, the U.S. remains in a severe housing shortage.

"We learned last week that inflation continued to cool in May, which means mortgage rates could decline in late summer or early fall," Redfin economics research lead Chen Zhao said, per Redfin. "A drop in mortgage rates would bring both buyers and sellers back to the market, which could either accelerate price growth or pull it back depending on who comes back with more force. If sellers come back faster, prices would likely cool, but if buyers come back faster, prices would likely ramp up."

Mortgage rates continue to decline this month compared to the above 7% 30-fixed mortgage rate the market saw in May. The current 30-fixed mortgage rate is 6.95%, a 0.04% decrease from last week, Freddie Mac reported. However, with a high mortgage rate for homes currently on the market, sellers lose their incentive to list their homes with their significantly lower mortgage rates.

"Many sellers who are also prospective buyers opted to defer their selling plans, resulting in a notable slowdown in listing activities. Alongside the scarcity of fresh listings, the increasing buying costs propelled by rising mortgage rates may leave many homebuyers feeling disheartened," economist Jiayi Xu said, per Realtor.

"With hopes from both sellers and buyers to see a continued relief in mortgage rates, "the inflation is still far from the 2% target, but persistent inflation improvements and subsequent mortgage rate drops could pave the way for an unseasonably active summer and fall," Xu added.

Last month, Utah had 14,513 homes for sale, a 9.8% increase from a year ago, with an average of 35 days on the market, according to Redfin. Adding that, "27.7% of homes in Utah sold above list price, down 0.24 points year over year. There were only 33.3% of homes that had price drops, up from 30.0% of homes in May last year. There was a 99.3% sale-to-list price, up 0.2 points year over year."

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