The housing market in Indiana continues to cool rapidly, with home sales in October dropping 15.6% from the previous year according to the Indiana Association of Realtors (2022). This represents the largest year-over-year decline since January 2020 and is more than double the annual drop seen in September.
Several factors are contributing to the steep slide in home sales across the state. Mortgage rates have surged this year, with the average 30-year fixed rate rising above 7% in October compared to just 3.1% in January 2021 (Freddie Mac, 2022). This has significantly reduced homebuying affordability and priced out many prospective buyers. At the same time, economic uncertainty and recession fears have led to a decline in consumer confidence (The Conference Board, 2022).
Inventory levels are also rising sharply in Indiana, up 33% in October compared to a year ago (Indiana Association of Realtors, 2022). While more supply gives buyers more options, it also indicates weaker demand. Homes are taking longer to sell, with the average time on market climbing to 26 days versus 19 days a year earlier (Indiana Association of Realtors, 2022).
In terms of prices, Indiana has seen more modest gains than the country overall this year, but is now seeing declines in some metro areas. In October, the statewide median home price was up 6.8% from 2021 to $250,000 (Indiana Association of Realtors, 2022). However, prices dipped 1.3% in the Indianapolis metro area in October, one of the first declines after rapid appreciation over the past two years (Indianapolis REALTORS®, 2022).
The plunging home sales in Indiana mirror the national housing market slowdown as higher interest rates decrease purchasing power (National Association of Realtors, 2022). But the magnitude of the drop reflects particular weakness in demand across Indiana likely due to greater reliance on manufacturing. With the Fed determined to cool inflation through aggressive rate hikes, economists expect the housing slump to continue into 2023 (Forbes, 2022).
References
Forbes. (2022, November 2). Here’s When Experts Predict The Housing Market Will Bottom Out In 2023. Forbes. https://www.forbes.com/advisor/mortgages/when-will-housing-market-crash/
Freddie Mac. (2022, November 3). Mortgage Rates Archive. FreddieMac. https://www.freddiemac.com/pmms
Indiana Association of Realtors. (2022, November 14). October 2022 Housing Data. IAR. https://www.inrealtors.com/market-statistics/
Indianapolis REALTORS®. (2022, November 10). Monthly Market Update October 2022. IRMLS. https://www.irmls.com/market-statistics/
National Association of Realtors. (2022, November 18). Existing-Home Sales Decrease for Ninth Straight Month in October. NAR. https://www.nar.realtor/newsroom/existing-home-sales-decrease-for-ninth-straight-month-in-october
The Conference Board. (2022, November 29). Consumer Confidence Survey. TCB. https://www.conference-board.org/data/consumerconfidence.cfm
