The Charlotte region's residential real estate market may lean in favor of buyers now, but ultimately affordability is a hindrance.
Mortgage rates are slightly lower, inventory has marginally risen and price reductions have rocketed. But home sales are still down across the Charlotte area, according to the Canopy Realtor Association's September housing market report.
Home sales across the 16-county region, which include single-family, condos and townhomes, declined by 7.3% year-over-year in September, according to the report. Compared to August, sales were down 13.4%.
In Charlotte, home sales decreased by 9%.
Part of the decline could be due to affordability issues, said Jackie Benson, a local economist with Wells Fargo.
"The affordability environment in the home market remains poor," Benson said. "Mortgage rates have dipped a little bit... But in historical context and compared to the average mortgage rate in 2021, rates are still double now what they used to be. At the same time, we've seen home prices continue to rise and that's especially true in the Charlotte market."
Nationally, home prices are about 50% above pre-pandemic levels and in Charlotte, prices are about 66% higher, Benson said, using data from Realtor.com.
Canopy's report echoes the numbers.
Compared to September 2023, average sale prices in the region sit at about $502,717, an increase of 7.1%, according to the report. Median sale prices are about $395,000, increasing by 3.9%.
In Charlotte, the median price rose by 0.2% to $410,000 and the average sales price rose by 5.1% to $569.581.
The Federal Reserve cut the federal interest rate by half a percentage point in September, bringing the rate into a 4.75 % to 5% range. It's the first cut the Fed has made since March 2020.
While the rate cut doesn't directly impact mortgage rates, it can and has influenced them.
Interest rates in North Carolina, as of Tuesday, are about 6.69% for a 30-year fixed rate mortgage, according to Bankrate, a personal finance company. The rate has increased since September, which saw about 6.32%, but still lower than last year, which was in the 7% range, according to data from Freddie Mac.
Lower mortgage rates are bringing out buyers, according to Canopy's report.
Pending contracts, which Canopy said represents buyer demand, rose last month by 14.4% compared to September 2023. Showing activity also increased, another representation of buyer interest.
Foot traffic rose by 13.5% compared to last year, the report read.
Home price reductions are up again. They increased in September by 31.6% compared to last year.