Federal Reserve chairman Jay Powell is having his way with the Portland housing market.
The median sales price in the metro area fell 0.7% to $507,500 in December 2022 compared with $511,000 in December 2021, according to the Regional Multiple Listing Service, a firm that tracks real estate sales in the Northwest. The one-month decline was steeper. Prices fell 3.5% from November’s $525,900.
The decline comes as the U.S. Federal Reserve raises interest rates to rein in rising prices. Mortgage rates have followed the Fed’s benchmark rates higher, making it more expensive to borrow. Less borrowing means consumers have less money to spend on houses, cars, big screen TVs, and whatever else they buy on credit, diminishing demand and easing prices.
Almost every other measure of the housing market fell as well, according to RMLS. New listings fell 32.9% in December from a year before as more homeowners decided they were happy to keep their homes and, perhaps, their low mortgage payments.
Fewer listings meant fewer sales. Closings fell 43.3% to 1,464 in December from 2,582 in December 2021, and dropped 9.7% during the month alone, according to RMLS.
Inventory rose compared with a year ago, jumping to 2.3 months’ worth of sales from 0.6 in December 2021. That’s still low, according to conventional wisdom in the industry. A market that’s balanced and favors neither buyers or sellers has about six months of inventory, according to Bankrate.com.
RMLS reports statistics only. It doesn’t comment on the causes behind market conditions.