PROVIDENCE — Rhode Island’s shortage of single-family homes continues to be more severe than the nation’s average, leading to skyrocketing prices of well over half a million dollars in some communities.
The median price of a single-family home in Rhode Island jumped to $450,000 in August, which is more than an 11 percent increase from this same time last year, according to data released by the Rhode Island Association of Realtors.
Monthly median sales prices have not fallen year-over-year since January 2017, but August was the first time Rhode Island’s home buyers had to contend with double-digit increases since June 2022.
The market continues to remain highly competitive. On average, homes were listed for just 27 days in August before they were purchased, according to the association.
Just 726 single-family homes sold in Rhode Island in August — a decrease of more than 25 percent compared to the 986 homes sold in August 2022.
There are less than two months worth of supply of homes for sale in Rhode Island, which is less than the nation’s average. According to the National Association of Realtors, there was a 3.3-month national supply available in July, which is the organization’s most recent available data.
Both state and national inventory are still “well below” the five- to six-month supply that typically indicates a “balanced market,” according to Kerry Park, vice president of strategic initiatives at the Rhode Island Association of Realtors.
Even as prices remain high, some economists are predicting that mortgage rates will fall in 2024. If prospective buyers can manage to secure a home by the end of 2023 and start building equity, “They could have the chance to refinance next year,” said Bryant Da Cruz, the president of the Rhode Island Association of Realtors.
Home buyers in every Rhode Island county faced significant price jumps, such as in Cumberland where home prices increased by more than 15 percent in August to $509,000. In the opposite corner of the state, Westerly saw a nearly 39 percent price increase to $552,500.
In Newport County, Portsmouth saw a more than 38 percent price hike to more than $927,500.
In the East Bay, the most significant price jumps year-over-year were in Bristol by more than 35 percent to $705,000, and in Warren by nearly 31 percent to $491,000.
In the Greater Providence area, home sales dropped as prices saw significant gains. In North Providence, the number of homes sold decreased by nearly 44 percent from August 2022 to August 2023, but prices jumped by 24 percent to $398,250.
The state’s multifamily home sector is facing similar struggles. The number of closed sales dropped year-over-year by 33.8 percent in August, as average prices climbed from $424,500 to $475,000.
The median price of a condominium sale rose by nearly 23 percent to $384,500 in August, as sales fell by nearly 11 percent.
“The rate of decline in closed sales activity fell significantly in the condominium and multifamily home markets, possibly a sign that supply and demand is becoming more balanced,” wrote Park in the association’s data release. “However, low inventory fueled by Rhode Island’s lagging housing production and homeowners staying put to keep record-low interest rates, will likely keep prices high.”