After a record breaking year in 2015, Kentucky’s number of homes sold set new highs in 2016.
Total home sales were the highest ever recorded in the state at 52,123, an 8 percent increase over the 48,259 sold in 2015. The Kentucky Association of Realtors (KAR) reported that over the past five years, home sales increased monthly, year-over-year, in all but seven months.
In both November and December, homes sales hit a new record, surpassing the 4,000 unit threshold with 4,088 and 4,131 homes sold respectively. These figures represent a 26.9 percent increase over the 3,222 homes sold in November 2015 and a 9.2 percent increase over the 3,782 homes sold in December 2015.
Home prices in the state increased to a median of $122,125 for the year, the highest annual median price recorded in the state, exceeding the record of $119,091 for 2015 by 2.5 percent. Even with back to back record years, the increase in price for Kentucky was far below (just over 55 percent) the national median home price of $221,500. In December, Kentucky’s median home price climbed to $120,910, another record for the state.
Total volume of all homes sold in Kentucky broke the $9 billion mark for the first time with $9.17 billion in sales. This surpasses the $8.21 billion sold in 2015.
“2016 was a unique year for real estate in Kentucky,” said Mike Becker, 2017 president of KAR. “Low inventory was an issue in just about every region of the state, but with low interest rates and a continuous demand from qualified buyers, homes didn’t stay on the market long if they were priced appropriately.”
At the end of the year, housing inventory across Kentucky was down 25 percent from 2015. Having 4.6 months of inventory to close out 2016 (compared to 6.1 months in 2015) puts the state into what is characteristically a seller’s market, but consumers are seeing affordable prices on the buying side.
Days on market (DOM), an indicator that shows housing demand, dipped 5.7 percent to 131.9 days in 2016. In larger metro areas in Kentucky such as Lexington and Louisville, days on market are down into the range of two to three months.
Official figures aren’t yet available for 2017, but local associations across Kentucky are remaining optimistic for another banner year. Reports are showing a strong economy, lower unemployment rates and the federal interest rate was left unchanged at its last meeting.
“Kentucky’s economy remains stable and that is always a good thing for real estate,” says Becker. “Our low cost of living compared to most of the country and the momentum carried over from an active 2016 is the foundation needed to sustain a healthy real estate market throughout the year.”
On the national level, as it was echoed throughout many Kentucky regions, inventory is the biggest variable on how 2017 shapes up for real estate.
New construction seems to be the main factor related to inventory.
Lawrence Yun, chief economist for the National Association of REALTORS® (NAR) said housing options for both buying and renting remains a pressing concern because of another year of insufficient home construction.
“Given current population and economic growth trends, housing starts should be in the range of 1.5 million to 1.6 million completions and not stuck at recessionary levels,” Yun said. “More needs to be done to address the regulatory and cost burdens preventing builders from ramping up production.”
Nationally total housing inventory was at the lowest level since NAR began tracking the supply 18 years ago.
“We are at a time where, in most areas, well priced homes are moving fast due to low inventories. It has become a low supply versus high demand issue and buyers who want to get in the market have to move quickly to secure a home,” said Becker. “Boosting home construction should give buyers more options and help sellers feel more comfortable putting their homes on the market. Home building may ramp up going forward but if you need to sell now, the market seems primed.”
The Kentucky Association of REALTORS® is one of the associations in Kentucky. Founded in 1922, KAR represents more than 10,300 REALTORS® who are involved in all aspects of real estate, including residential and commercial real estate brokers, sales agents, developers, builders, property managers, office managers, appraisers and auctioneers.
To view housing statistics for the state, as reported to KAR, click here .
Kentucky Association of Realtors
