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Housing market stays hot despite colder temperatures

More properties needed to meet increased demand

Published Thursday, February 18, 2021
By: LBAR

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The first month of the new year saw colder temperatures but hotter activity compared to 2020. Total home sales reached 939 in January compared to 828 during January last year, an increase of 13 percent. Transactions in January were the highest monthly total on record, breaking the previous record from 2020. Both single-family homes and townhouse/condo saw a sales increase of 13 percent for the month, matching the overall sales tally for January.

New construction sales were down 13 percent over last year but still managed to be the second highest January sales total since 2007.

Pending sales decreased for the first time since the start of the pandemic, dropping 2 percent in January from 1,161 last year to 1,133 this year. January’s number was the second highest monthly total on record and the first drop since the start of the pandemic but could signal a future slowdown in the market due to a significant decrease in inventory and new listings posted for the month.

“Despite the lack of inventory, the real estate market has been able to maintain a healthy level of activity in both traffic and sales,” said Kristy Gooch, president of the Lexington-Bluegrass Association of REALTORS® (LBAR). “However, without more sellers, the market won’t be able to sustain this momentum forever. There is an appetite for more properties to accommodate the heightened demand that exists in the marketplace.”

Inventory in the region hit all-time lows in January and continued the downward trend that has been in play since mid-2019. Homes for sale dropped 55 percent in January, hitting 1,397 residential properties for sale compared to 3,088. This is down over 14 percent from December which was the previous record low and continues to put pressure on buyers looking for property.

The cold weather contributed to the number of homes that were brought to market as a three-month improvement streak was snapped in January as new listings dropped 20 percent for the month compared to last year. The 1,073 new listings for the month were the second fewest on record for January, trailing only the 1,066 recorded in 2016. Last year in January, 1,343 new listings were listed for sale.

“Homes aren’t sitting on the market for long despite a cold stretch and conditions that weren’t optimal for shoppers to get out and visit homes at the start of the year,” stated Gooch. “Despite the weather, buyers persisted to take advantage of low rates and limited inventory.”

The increase in sales have cut into the months of inventory in the region again to start the new year. In January, the months of inventory dropped a staggering 59 percent, from 3.7 months last January to just 1.5 months in 2021. This is near record lows and is a new record for the month. Homes priced in categories under $250,000 but more than $140,000 had less than a month of inventory available, some around two weeks, when last year those same categories had 2.7 months of inventory. A six-month supply is typically considered a balanced market.

Days on market in January hit the third lowest on record by falling 46 percent over last year. With homes selling at 32 days, versus 59 in 2020, the total in January is only behind November and December at the pace homes are selling. Almost three quarters (74 percent) of all home sales occurred in less than a month with only 6 percent taking longer than 120 days.

Central Kentucky housing prices have continued to surge thanks to the increase in demand coupled with record low inventory. The median home price in January increased by double digits for the seventh consecutive month, reaching $195,000 compared to $173,500 in 2020, a gain of 12 percent. Single-family homes increased 14 percent to $200,000 while townhouse/condo prices jumped 5 percent to $140,000.

With a strong combination of sales and median price increases, the total dollar volume of home transactions soared 30 percent in January to over $222 million for the month, compared to just over $171 million last year.

Gooch added, “Real estate has pushed through all the challenges we have faced over the past year. As long as the low rates continue, which it appears will be the case going forward, the market should stay relatively strong for 2021. We simply need more properties to come online to satisfy the level of demand that doesn’t seem to be wavering.”

Showing activity hit a lull in the middle of January but picked up heavily toward the end of the month. Total showings were up 4 percent for the month, from 18,451 last year to 19,182 this year. The increase in showing came during a time when the number of properties were down significantly.

As the region’s leading advocate for homeownership, Lexington-Bluegrass Association of REALTORS® (LBAR) understands the value and joy of owning a home. LBAR represents more than 3,500 REALTORS® located in 26 counties: Anderson, Bath, Bell, Bourbon, Clark, Clay, Elliott, Estill, Fayette, Franklin, Harrison, Jackson, Jessamine, Knox, Laurel, Lee, Madison, Menifee, Montgomery, Nicholas, Owsley, Powell, Rowan, Scott, Whitley and Woodford Counties. Visit www.lbar.com for up to the minute real estate listings and buying and selling resources.