A tight existing home supply in Lake and Porter counties is keeping home prices stable even as sales begin to show signs of slowing, according to figures provided by the Northern Indiana Realtors Association.
Median home prices were up 1% in Lake County in October at $231,250 over $229,000 for the same month last year. Porter County saw a 3.3% increase year over year, from $278,000 to $287,250, according to the Residential Property Sales Statistics October data compile by NIRA.
“What’s kind of saving the market from the pricing standpoint is we still have a very limited inventory,” Peter Novak, NIRA executive director, said.
Currently there is about a 2.3-month supply of inventory in the market that includes Lake, Porter, LaPorte, Newton, Jasper, Pulaski and Starke counties. A market is considered balanced at around a 5- to 6-month supply. Nationally, the supply is at about 3.3 months and slowly growing, he said.
“We are nowhere near balanced at the moment. We are heading back toward being balanced slowly,” Novak said.
Tight supply continues to make this a seller’s market with homes moving quickly once they go up for sale because demand has remained strong, Novak said. New existing home sales listings are down 11.6% year over year. And while in Lake and Porter counties the double digit increases in home values prevalent during the pandemic have subsided, the prices are holding strong and not declining.
In October, 458 units sold in Lake County while 142 sold in Porter County. The figures were down from October 2022 numbers when 535 units sold in Lake County and 142 units sold in Porter County, according to the data. The figures represent a 14.4% and 21.1% decline, respectively. Sales in Lake County ticked up slightly from September to October of this year when 447 units sold compared to 458.
The number of units sold in Lake and Porter counties total so far this year compared to the same time frame in 2022 is seeing a double-digit decline, evidence of the tight market supply. Through October 2022 there were 5,480 units sold in Lake County and 1,958 units sold in Porter County. So far this year 4,603 units have sold in Lake County, a 16% year-over-year decline while 1,502 units have sold in Porter County, a 23.3% decline, according to the data.
Novak said higher interest rates have worked to cool the market as intended and is impacting both supply and demand. In some cases, homebuyers may not be able to afford the home they were seeking because of higher interest rates. Some sellers looking to capture the equity in their homes may be waiting to sell because they would be re-entering the market at a time of high home values and high interest rates.
“At some point, you will continue to see the inventory increase and there will be less buyers,” Novak said. The dynamic could produce downward pressure on home prices. He said he does not expect to see any major changes in the local market anytime soon unless a large national or global event further disrupts the markets.
“Things have looked largely same most of this year to be honest,” Novak said.
Building permits for new single-family homes in Indiana were up 20% in August, the last month for which figures are available, according to information compiled by the Indiana Builders Association from the U.S. Census Bureau’s most recent report on building permits in the state.
According to the data, 1,738 single-family permits were issued in August 2023 compared to the 1,447 permits issued in August 2022. The surge represents the highest number of permits issued for the month of August since 2007. August 2023 permit numbers were also up 20% from July of this year when 1,443 permits were issued.
The cumulative single-family permit numbers for the first eight months of 2023 stands at 11,370. While robust, the figure represents a 17% decline when compared to the same period in 2022.
Ric Zehr, president of the Indiana Builders Association, said the surge in single-family permits in August is a positive sign for the housing market reflecting continued strong demand with a shortage of single-family home supply on the market. The year-to-date decline in permits is not the full story.
“Single family permits in Indiana over the last 10 years, post-Great Recession, have averaged 14,920. The 2023 year-to-date numbers put Indiana closer to the 10-year average. It is clear that even in this relatively high mortgage rate environment, the housing sector remains dynamic and responsive to changing conditions,” Zehr said.
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