April 2022 Home Sales Report Recent Spike in Mortgage Rates Lowers Statewide Affordability Date: May 23, 2022
April 2022 at a glance
The ongoing problem of low inventories hindered existing home sales in Wisconsin and also drove statewide prices to new heights. April home sales fell 14.8% between April 2021 and April 2022, whereas the median home price rose 13% to $265,501 over that same 12-month period.
Sales in the first four months of 2022 were down 7.3% compared to that same period in 2021, and the median price increased 11.1% to $249,900 over the same period.
Home inventories continued to tighten with only 2.4 months of available supply in April, a reduction of 11.1% relative to April 2021. This is well below the six-month benchmark that indicates a balanced market, and hence the market remains a strong seller’s market
The increase in the average 30-year fixed mortgage rate accelerated in April, rising to 4.98%. This compares to an average 30-year rate of 4.17% a month earlier, and 3.06% in April 2021.
The combination of strong upward pressure on home prices and rapidly rising mortgage rates resulted in a dramatic 27.9% reduction in statewide home affordability. The Wisconsin Housing Affordability Index shows the portion of the median-priced home that a qualified buyer with median family income can purchase, assuming a 20% down payment and a 30-year fixed-rate mortgage at current rates used to finance the remaining balance. In April 2021, that buyer could purchase 197% of the median-priced home, and just 12 months later in April 2022, that same qualified buyer could only purchase 142% of the median-priced home.
Average days on the market fell 18.8% over the last 12 months, from 85 days in April 2021 to just 69 days in April 2022.
Analysis from the experts
Tight inventories a persistent problem
"Inventories tightened over the past year in every region of the state and across all types of counties, ranging from those in rural areas to large metropolitan areas. We do expect rising mortgage rates to moderate demand pressure, but we are likely to remain in a strong seller’s market throughout the prime summer sales period."
Brad Lois, 2022 Chairman of the Board of Directors, Wisconsin REALTORS® Association
Taming inflation a priority for the fed
"Fed Chairman Jerome Powell has indicated that the Fed is fully committed to getting inflation under control, and it recently increased the federal funds rate by a half a percent, demonstrating its increased hawkishness on inflation. Hopefully the Fed can strike the right balance of slowing the economy enough to reduce inflationary pressures without pushing the economy into recession."
Dave Clark, Marquette University Economist and WRA Consultant
Affordability falling more rapidly
"Until recently, low mortgage rates helped offset the double-digit increase in home prices, keeping Wisconsin housing relatively affordable. However, the inflation-induced increases in mortgage rates have driven affordability down, and that is likely to moderate sales going into our peak summer sales market."
Michael Theo, President & CEO, Wisconsin REALTORS® Association