Interest Rate Effect

Analysis of Mortgage Interest Rates & Real Estate Activity

I have analyzed the relationship between mortgage interest rates and real estate activity in our market using data from Baldwin Realtors MLS, covering the period from January 1, 2021, to the present. This study focuses on single-family detached housing, with interest rates rounded for simplicity. The findings represent the entire MLS area, not just South Baldwin.

In a future blog, I will examine condo sales to determine whether there is a noticeable difference in trends.

Key Findings:

Sales Activity Declines with Higher Interest Rates – When rates averaged around 3%, monthly sales activity remained in the high 700s. However, as rates rose to approximately 7%, monthly activity declined to the 600s.
Days on Market (DOM) Increases – At 3%, the average DOM remained under 10 days. At 7%, DOM extended into the 40s.
Property Values Show Resilience – Despite fluctuations in interest rates, property values have exhibited steady appreciation, with no significant downturn observed thus far.

In the next blog, I will explore condo sales and inventory levels to gain additional insights into market trends.

	Number of Closings	Days on the Market	Median Selling Price	30 yr Mortgage Interest Rate
Jan-21	493	21	$245,000.00	3%
Feb-21	576	23	$260,000.00	3%
Mar-21	788	13	$264,000.00	3%
Apr-21	701	8	$275,000.00	3%
May-21	727	8	$267,000.00	3%
Jun-21	968	5	$280,000.00	3%
Jul-21	767	6	$289,000.00	3%
Aug-21	727	8	$285,000.00	3%
Sep-21	784	8	$280,000.00	3%
Oct-21	629	10	$287,000.00	3%
Nov-21	623	10	$300,000.00	3%
Dec-21	742	10	$310,000.00	3%

Jan-22	557	14	$290,000.00	3%
Feb-22	617	12	$312,000.00	4%
Mar-22	814	10	$321,000.00	4%
Apr-22	712	9	$322,000.00	5%
May-22	779	7	$315,000.00	5%
Jun-22	705	7	$329,000.00	5%
Jul-22	642	7	$330,000.00	5%
Aug-22	633	11	$331,000.00	5%
Sep-22	637	12	$330,000.00	6%
Oct-22	480	17	$330,000.00	7%
Nov-22	478	21	$330,000.00	7%
Dec-22	483	31	$345,000.00	6%

Jan-23	387	35	$314,000.00	6%
Feb-23	471	40	$329,000.00	6%
Mar-23	635	28	$338,000.00	7%
Apr-23	525	23	$335,000.00	6%
May-23	634	21	$342,000.00	7%
Jun-23	736	23	$342,000.00	7%
Jul-23	576	26	$340,000.00	7%
Aug-23	675	27	$343,000.00	7%
Sep-23	619	27	$339,000.00	8%
Oct-23	476	27	$343,000.00	7%
Nov-23	420	29	$341,000.00	7%
Dec-23	422	33	$335,000.00	7%

Jan-24	405	44	$329,000.00	7%
Feb-24	443	37	$343,000.00	7%
Mar-24	601	36	$335,000.00	7%
Apr-24	571	29	$342,000.00	7%
May-24	643	33	$356,000.00	7%
Jun-24	683	35	$348,000.00	7%
Jul-24	628	41	$340,000.00	6%
Aug-24	577	34	$342,000.00	6%
Sep-24	515	36	$336,000.00	7%
Oct-24	539	40	$335,000.00	7%
Nov-24	471	45	$322,000.00	7%
Dec-24	527	46	$340,000.00	7%

Jan-25	414	56	$337,000.00	7%
Feb-25	438	54	$338,000.00	7%
Mar-25	582	40	$348,000.00	7%
Apr-25	657	41	$338,000.00	7%
May-25	715	40	$340,000.00	7%