PEORIA - Low inventory and high interest rates led to lower homes sales in the Peoria area in 2023.
Sales were down 12.8% in 2023 compared to 2022, according to the Peoria Area Association of Realtors.
Last year, 5,641 homes sold in the Peoria area, compared to 6,472 in 2022. Inventory shrank to 576 homes for sale at the end of 2023, compared to 724 homes on the market at the end of 2022.
Are home prices up in the Peoria area?
While sales were down, home prices were up. The average sales price for homes sold in 2023 was up by 6.9%, said PAAR president Bill McCarthy, with the average sale price of homes sold in 2023 at $176,277, compared to $164,870 in 2022.
"Low inventory and higher interest rates had a lot to do with it," said McCarthy. "I spoke with John Lofgren, a longtime mortgage lender in Peoria. The average lending rate in 2022 was 5.5%, but last year the interest rate averaged 6.8% with some interest rates running as high as 8.5%."
McCarthy said interest rates may dip in 2024, but they won't return to pre-COVID rates of 3% to 4%.
"I expect the market to be tight throughout 2024," McCarthy said. "Home values will be maintained. If they do go up, it will be just a little."
More: Will 2024 be a good time to buy or sell a home in Peoria? Here's what the experts say
Low inventory is a national housing issue
Low inventory is not just a Peoria thing, according to McCarthy.
"I just came from Illinois Realtors Winter Business Meetings in Bloomington. They were talking about inventory problems statewide as well as nationally," he said.
The National Association of Realtors reported an 18.7% decline in home sales across the U.S. last year, the biggest annual decline since 2007, the year that marked the start of the housing slump of the late 2000s. The median price for homes sold across the U.S. last year was $389,800, highlighting the fact that homes in the Peoria area remain affordable. The median price for homes sold in Peoria in 2023 was $142,950.
In spite of higher interest rates, homes are still selling, and some homes are getting multiple offers, McCarthy said. Because the market is tight, buyers need to get pre-approved and pre-qualified before making an offer.
"You need to have the down payment ready when you make an offer. That's what sellers are looking for," he said. "We've never seen so many cash buyers as we have in recent years."
More: Luxury, history and river views: The 10 most expensive Peoria County homes sold in 2023
This article originally appeared on Journal Star: Fewer Peoria area homes sold in 2023 with low inventory and interest rates