Northeast Ohio home-sales growth eases as interest rates rise

May home sales inched up 0.6% across Northeast Ohio, as the hot residential real estate market showed hints of cooling.

Across 18 counties, buyers wrapped up purchases of 4,521 houses and condominiums last month, according to data from MLS Now, a regional listing service. Sales jumped from April, as they typically do during the busy spring buying season.

The May closings involve properties that went under contract in March or April, during a severe listings shortage. Since then, the supply of available homes has been rising, but inventory remains near record-low levels.

At the current pace of buying, listings in the Cleveland-Elyria-Mentor metropolitan area would sell out in only seven weeks, based on data compiled by Redfin, a Seattle-based brokerage.

Sales are slowing somewhat due to that inventory crunch and rising borrowing costs, said Seth Task, an agent with Berkshire Hathaway HomeServices Professional Realty in Moreland Hills and immediate past president of the Ohio Realtors trade group.

But he isn’t predicting a significant pullback.

“This country is still short 5.5 million residential units that should have been built over the last decade for the millennial generation and the Z generation behind it,” Task said, bemoaning labor shortages, supply-chain backlogs and regulatory hurdles that are hampering builders.

“I don’t see a huge relaxation until we figure out the solution to how we put enough inventory into the marketplace,” he said.

New and existing homes across the region are changing hands after an average of four weeks on the market, according to MLS Now. That’s down from roughly six weeks a year ago.

And prices continue to rise at a swift clip. The average sale price for a single-family home was $247,673 in May, up 12.8% from a year before. The typical condo sold for $194,917, marking a 13% price increase from May 2021.

Buyers paid as little as $9,900 and as much as $3.3 million for houses, MLS Now reported. The listing service captures the vast majority of sales across the region.

In Cuyahoga County, May sales rose 1.6%, when compared with a year before. The average sale price skyrocketed by 17%, to $259,309, during that period.

Summit County sales jumped 11.3% from May 2021, while the average sale price increased by 14.3%, to $235,912.

May sales softened in many outlying counties, though prices broadly continued to climb.

Task was surprised recently when one of his suburban listings, east of Cleveland, garnered only six showings and a single offer — at a relatively modest $20,000 above asking price. He sees other indications that the breakneck pace of purchasing is easing, now that the average interest rate for a 30-year mortgage is hovering around 6%.

“It goes without saying that there’s a certain percentage of buyers that no longer have the purchasing power to buy a house that they were able to buy six months ago,” he said.

But a less intense market could be a boon to other buyers who are tired of bidding wars — and to potential sellers who have been reluctant to list their properties because of concerns that they won’t be able to find anywhere to move.

As for harried real estate agents, he said, “we’ll all get a little more rest.”