Champaign County Housing Market Faces Challenges Amidst Inflation and High Mortgage Rates
The housing market in Champaign County has experienced a turbulent year in 2023, marked by the dual challenges of inflation and rising mortgage rates. Despite these hurdles, the area saw an increase in both median and average home sales prices, as reported by the Champaign County Association of REALTORS® (CCAR).
According to year-end data, the total number of home sales in 2023 was 2,578 units, a decline of 14.1 percent from the 3,002 units sold in 2022. This downturn is attributed to a combination of higher mortgage rates and reduced inventory levels. However, the median home sale price in the area rose to $197,000, up 6.3 percent from the previous year’s $185,000. The average sale price also saw an increase, rising by 4.4 percent to $232,513.
December 2023 brought some positive changes, with 180 homes sold, a 3 percent increase from December 2022. The median sale price for December soared to $196,500, marking a significant 19 percent increase from the previous year. The average sale price followed suit, reaching $232,726, an 11 percent rise from December 2022.
Jim Waller, President of the CCAR, commented on the market’s resilience. “Sales were steady in December, and with the recent decrease in mortgage rates, we are cautiously optimistic for a rebound in home sales in 2024,” he stated. The Federal Home Loan Mortgage Corporation (Freddie Mac) reported that the average rate on a 30-year fixed-rate mortgage was 6.67 percent in December 2023, a slight increase from the previous year but showing a downward trend from November 2023.
Mark Palim, Vice President and Deputy Chief Economist at Fannie Mae, highlighted the shift in consumer sentiment. “Mortgage rate optimism increased dramatically this month,” he said, indicating a hopeful outlook for improved home affordability in 2024. This optimism could encourage more homeowners to sell, potentially increasing the supply of existing homes.
The market also showed signs of normalizing, with pending home sales in December experiencing a modest 1.9 percent increase compared to the same period in 2022. The inventory of homes for sale as of January 16, 2024, stood at 604 properties, a decrease from the previous month. The average time to sell a home also reduced to 41 days in December, down from 45 days a year ago.
Overall, the Champaign County housing market faced significant challenges in 2023 but showed resilience in the face of inflation and fluctuating mortgage rates. With the recent trend in mortgage rates and consumer sentiment, there is cautious optimism for a more stable market in 2024.
