For several months in late 2021 and early 2022, metro Atlanta home prices appreciated at an astronomical rate, growing in excess of 20% year over year.
Times have changed.
The metro area’s annual home price appreciation was flat last month, according to First Multiple Listing Service data. The median-priced Atlanta home sold for $375,000 in January 2023, just like it did in January 2022.
“The Atlanta real estate market has been rebalancing over the last several months,” Atlanta Realtors Association President Michael Fischer said in a recent market briefing.
Atlanta Housing Prices Flatten
Metro Atlanta’s median home price hit a record $433,000 last June, but the housing market shifted dramatically during the second half of 2022. After two years of frenzied activity, homebuyer demand dried up as mortgage rates climbed from historic lows to a level not experienced since before the Great Recession.
Most homeowners had bought during the previous decade when rates were lower, or refinanced when rates hit rock bottom in the months following the pandemic’s arrival. Generally, major life changes such as job relocations, marriages, divorces or newborn children have been the only causes for people to move and take on higher rates.
Though annual appreciation was flat last month, the typical metro Atlanta home was $70,000 more expensive than in January 2021. The median price has gone up $113,000 since January 2020.
Demand for Atlanta Housing Drops
The number of monthly pending home sales in metro Atlanta fell to a 12-year low in December, according to FMLS. Meanwhile, new listings dropped to the lowest monthly total in 10 years.
Those factors combined to make January metro Atlanta’s slowest month for home sales since January 2011. There were fewer than 2,800 sales last month, down 38% compared to January 2022 and a 67% decline from the monthly pandemic-era high in July 2020.
Despite lower buyer demand, housing inventory remains tight. The National Association of Realtors estimates there is 2.9 months’ supply of homes for sale in the United States. In metro Atlanta, there is less than two months’ supply, per FMLS. Real estate professionals consider a normal sellers’ market to exist when there is four to six months’ supply.
“Historically, housing is in short supply,” Fischer said in the briefing, “but more balanced conditions will present buyers with opportunities they haven’t seen in several months.”
Signs of Housing Rebound
Average mortgage rates are still higher than at any point since the Great Recession, but they have receded since peaking in the fall. This development is bringing some buyers off the sidelines and could be a sign that housing market activity will rebound if rates continue to tick down throughout this year. Executives at Atlanta-based homebuilder PulteGroup recently told analysts that the company’s sales increased each of the final three months in 2022, a trend that continued into January.
The typical monthly mortgage payment declined 6.3% — or $157 — over the final three months of last year, according to a Feb. 2 report from national brokerage firm Redfin Corp. (Nasdaq: RDFN).
“With interest rates continuing to pull back from recent peaks, we are expecting a busy spring market on the horizon,” Fischer said in the briefing.