WISCONSIN — Monthly home sales in Wisconsin are down by 33.8% for the month of January. Listings are down by 16.2% statewide.

The Wisconsin Realtors Association said the drop in home sales is a continual trend that started in the fourth quarter of 2022. In the first nine months of 2022, home sales dropped by 8.8% when compared to the same nine months of 2021. However, when looking at the last quarters of each year, home sales dropped by 30.1% in 2022.

The median price of homes in Wisconsin rose by 8.5% from Jan. 2022 to 2023. The median price of a home that was closed on was $250,000. The Wisconsin Housing Affordability Index reported that house affordability in Wisconsin has fallen by 29.2% in the last year.

The Wisconsin Realtors Association said demand is “weak” because of affordability issues.

“In late October, 30-year fixed mortgage rates hit a weekly average of just over 7%, so it’s good to see them start coming down. However, we will need to see both lower mortgage rates and lower price pressure before there is appreciable improvement in housing affordability in the state,” Joe Horning, who sits on the board of directors of the Wisconsin Realtors Association said.

In Oct. 2022, Wisconsin saw mortgage rates hit peak levels, averaging at 6.9%. Rates remained high in Jan. 2023, averaging out at 6.27%. In Jan. 2022, the average mortgage rate in the state was 3.45%.

Home inventory is also weak in Wisconsin.

When comparing Jan. 2022 to Jan. 2023, new listings dropped by 26.2%. Overall listings have dropped by 16.2% in that same time period.

“We’ve been in a seller’s market for nearly six years and a strong seller’s market with less than four months of supply for the last three years. It’s a complicated problem because there is still unmet demand from millennials and now Generation Z buyers, even with relatively high mortgage rates. Unfortunately, we will need to see the supply side improve before sales begin to recover,” Michael Theo, president & CEO of Wisconsin Realtors Association, said.

The low home inventory has “kept upward pressure on home prices.” The market is still deemed a seller’s market, with only 1.9 months’ worth of available home supply, the same amount the state had a year ago. To be considered a balanced market, there would have to be six months’ worth of home inventory available in Wisconsin.

The Wisconsin Realtors Association said larger urban areas have seen the most sales activity in the state, but have the least supply, with just 1.8 months’ worth of inventory. Even so, rural areas have 2.6 months’ worth of supply, which the association deemed “very weak.”