July 7, 2022

Home prices continue their double-digit year-over-year increases in Sioux Falls — though fewer sold last month.

The city reported an 18.7 percent year-over-year drop in closed sales in June, according to the Realtor Association of the Sioux Empire Inc.

New listings fell 6 percent, leaving the city with a 1.8-month supply of homes on the market. That’s 42.4 percent less than last year.

“Rising inflation, soaring home prices and increased mortgage interest rates have combined to cause a slowdown in the U.S. housing market,” the RASE report said, noting that the Federal Reserve’s 0.75 percentage point interest rate hike in June was the largest since 1994.

“Higher prices, coupled with 30-year fixed mortgage rates approaching 6 percent, have exacerbated affordability challenges and rapidly cooled demand, with home sales and mortgage applications falling sharply from a year ago,” it said.

The average price of a house sold in Sioux Falls in June was $368,561, up 14.8 percent compared with the same time last year. The median home price at $326,000 increased 20.3 percent.

“With monthly mortgage payments up more than 50 percent compared to this time last year, the rising costs of homeownership have sidelined many prospective buyers,” the report said.

“Nationally, the median sales price of existing homes recently exceeded $400,000 for the first time ever, a 15 percent increase from the same period a year ago, according to the National Association of Realtors. As existing home sales continue to soften nationwide, housing supply is slowly improving, with inventory up for the second straight month. In time, price growth is expected to moderate as supply grows; for now, however, inventory remains low, and buyers are feeling the squeeze of higher prices all around.”

The average house in Sioux Falls spent 70 days on the market before selling in June, which is four days fewer than the same time last year. Sellers received on average 103.4 percent of their list prices, which is slightly better than last year, indicating that competing offers still are happening.

For the 12-month period spanning July 2021 through June 2022, pending sales in the Sioux Falls metro area were up 1.9 percent. The price range with the largest gain in sales was $700,000 to $800,000, which was up 110.5 percent.

Builders are showing their lowest level of confidence in the market in two years, according to the National Association of Home Builders.

“Buyer traffic is down, and as construction costs increase and housing affordability declines, construction on new homes is slowing, reflecting concerns among builders about current and future sales of new single-family homes in the months ahead,” the RASE report said.