Utah Housing Market Update

As Halloween approaches, children shiver at the thought of ghosts, witches, and other creatures that come to life in spooky stories. For adults, the scary stuff stays year round. It may come with less teeth, but the bite of high interest rates and affordability issues have left many feeling strained. 

The Utah housing market may seem petrifying, but recent positive shifts signal that the market is becoming more balanced. Three key elements; inventory, interest rates, and home prices are the interdependent variables that determine affordability and will shape the state’s real estate landscape moving forward.  

Inventory

After years of frantic activity and limited supply, Utah’s housing market is becoming more buyer friendly. Sellers recently had an upper hand during the pandemonium of low interest rates and sky rocketing prices during the pandemic, but that spell has already broken. 

Current active listings now exceed pre-pandemic levels of 2019, yet the housing market hasn’t become oversaturated despite increased supply. Utah has chronically been in a housing demand crisis and inventory is finally starting to catch up, creating an opportunity for new buyers to emerge from the twilight zone. 

Buyers today are being selective. Many aren’t interested in homes that need extensive repairs or renovations; high mortgage payments  leave little room for big projects. As a result, turnkey homes priced competitively are moving fast, while overpriced or outdated listings linger. 

Interest Rates 

Interest rates are the market’s trick or treat that dictates whether buyers get a sweet deal or a scary surprise. As of early October, the national average 30-year fixed rate is hovering around 6.2% to 6.3% (with rates in Utah are slightly lower). These levels are a welcome drop from peak levels earlier this year. Depending on various factors, buyers may even be able to get an interest rate in the high five percent range through strategic buy-downs or builder incentives. 

Rates are influenced by a combination of factors, including:

• Inflation data: If inflation stays stubborn, rates could remain elevated.

• Federal Reserve policy: The Fed has begun to shift toward rate cuts, but they’re moving cautiously.

• Bond market trends: Mortgage rates tend to follow the 10-year Treasury yield, which reflects investor expectations for inflation, growth, and risk.

• Global economic and political uncertainty: Markets are still sensitive to geopolitical headlines and fiscal policy developments, which can drive volatility.

Most forecasts suggest that mortgage rates will hover in this same general area for the next couple of months, with the possibility of a slight drop to around 6.1% to 6.2% near the end of this year — especially if inflation continues to cool and the Fed cuts their rate again. That said, markets remain highly data-dependent, and surprises (good or bad) could quickly shift that outlook in either direction (up or down). 

Prices

Utah’s home prices remain high but stable. In the last five years high demand has conjured huge home price (and equity) increases. Today’s balanced market has calmed howling price hikes, with slower price growth predicted between 1-3% annually over the next few years. 

If rates continue to follow current trends, home prices will continue to rise. People who have been watching for rates to drop from the sidelines will begin to enter the market, driving demand and prices higher. Home value fluctuates highly depending on the individual location, condition, age, and size of the property. 

Agents commonly suggest, “Marry the house, date the rate,” because waiting for a better rate may be more expensive in the long run when prices are propelled higher. Although affordability is still an issue, there are options that can help home buyers get into a property sooner than they might expect. 

Predicting exactly where the Utah housing market is headed would require a crystal ball and some serious witchcraft. However, positive inventory, interest rate, and home price trends indicate that the market is picking up speed with exciting opportunities for buyers and sellers. There are still frightening factors, but the overall picture is far less ghoulish than in recent years. Message us to start your real estate journey today.