how did the CT real estate market perform in Q1?
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By Brian Cleary | Published on April 26, 2024
To understand the Lower Fairfield County real estate market in the first quarter of 2024 you have to first look at inventory. Or at least, the relative lack of it.
Throughout the quarter, our inventory levels of houses and condos remained about 20% lower compared to the same period last year and a striking 80% below levels seen in the first quarter of 2019, prior to the pandemic.
The main reason for this scarcity of listings is the Federal Reserve’s decision to delay lowering its benchmark interest rates. This in turn has helped to keep mortgage rates in the upper 6% range for most of the year’s first three months. Given that most homeowners with mortgages currently have a rate below 6%—the median rate of all home mortgages in the U.S. is 3.8% according to the Bureau of Economic Analysis—this has prolonged what’s known as the rate-lock effect, where homeowners are reluctant to move and take on a new, higher mortgage rate.
With fewer homes available for sale in Lower Fairfield County, we’ve seen both a dip in sales totals and the continuation of a very strong seller’s market.
In the first quarter, the total number of sales dropped by 13% compared to the same period last year, with 809 house and condo closings representing the lowest total for the quarter since 2012. Furthermore, at the end of March, the number of house and condo sales in the pipeline, known as pending properties (those with signed contracts yet to close) was down 12% from a year ago.
Yet, despite the lower sales volume, demand remains as strong as ever. One sign of this is the high number of multiple-bid scenarios we are seeing in our market. In the quarter, over half of house closings sold for over the asking price, with the average list-to-sale price ratio at 102.6%, up 2.4% percentage points from the same time last year. For condo closings, 45% sold above the list price, with the average list-to-sale price ratio at 100.9%. This marked the fourth consecutive quarter this ratio was above 100% for condos.
This competition among buyers has pushed prices higher. In the year’s first three months, the average house closing price rose 14% to $1.6M, while the median price saw a 9% jump to $996K. In all, there were 24 house closings above $5M, the second most for a first quarter since 2007 and a big contributor to the higher average and median prices. For condos, the average closing price remained even with last year, while the median price rose 5% to $433K.
Despite the challenges posed by inventory shortages, as we look forward, there is certainly cause for optimism. The overall economy remains strong and the high demand we are seeing reflects the many great attributes of the Lower Fairfield County market for home buyers. Additionally, there is an expectation that mortgage rates will eventually start to inch lower in the second half of the year, which would likely increase overall activity in our market.