Today we’re taking a look at housing prices in Montana. In our last story, we reported on how tariffs on Canadian and Chinese building supplies are driving up prices for new homes in Montana.
But there appears to be some downward pressure on prices for existing homes.
“Well, so things are starting to change,” says Brint Wahlberg, of the Missoula Organization of Realtors.
Wahlberg says the local median sales price is still holding strong at close to $290,000.
“But the interesting story is that sales volume is slowing down. And so sales volume is off by about 5-and-a-half percent over where it was last year."
The National Association of Realtors says the number of new homes sold in October sales dropped just over 5 percent from this time last year; that’s the largest annual drop since July of 2014.
Wahlberg says housing inventory in parts of Montana is generally rising, homes are sitting on the market longer and sellers are suddenly more willing to negotiate.
“We’re seeing it quite significantly in kind of that $350,000 to $500,000 price range in Missoula. Those price points have had to price drop quite a bit compared to what they’re used to. Cause we’ve been riding a pretty easy wave since 2013.”
Rising interest rates are also putting downward pressure on home prices. The Federal Reserve raised short-term interest rates three times this year, from 3.9 percent to 4.8, and is expected to raise them again come December. Up to three rate hikes are possible next year.
“We’re starting to see more and more people though that are talking about - they should just cool it and see what the spring looks like and take it from there," Brint says. "It’s interesting, cause we’re returning to what we’d seen maybe 12 to 15 years ago with people wanting to take a little bit more of a measured approach to the market.”
But sales and prices trends vary a great deal depending on local markets.
Wahlberg points out sales volume is up 8 percent in the Bitterroot Valley just south of Missoula, where prices are generally lower.
In Bozeman’s city core, the median sales price for a home still hovers over $400,000. However, Wahlberg says sales volume there has slowed, as budget-minded homebuyers look for deals in outlying communities like Belgrade and Manhattan.
"We’ve noticed that’s started to happen up near Flathead, in Kalispell, Whitefish-type areas as well, too. But other markets - Billings and Great Falls-type markets they seem to be just chugging along, they're staying strong. Billings’ volume is still up just a little bit, where Great Falls is kind of flat. But they’re kind of the anomaly because their market’s pretty much run by the military base so prices stay flat, volume stays flat. They just kind of chug away.”
Wahlberg believes prospective homebuyers are weighing all their options, keeping close tabs on interest rates while also watching how international tariff skirmishes play themselves out.
“It doesn’t feel like to me like a bubble is building again. The good thing is it would seem like the backbone of the housing market is much, much stronger than it was in 2007, 2008. But this next stretch here you’re going to probably see continued slowdown in volume. People are going to opt not to build, they’re going to opt to stay where they are.”
The median U.S. house price rose almost 4 percent from a year ago to a little over $255,000. The inventory of homes for sale nationwide was up almost 3 percent from a year ago.
The National Association of Realtors says rising inventories are likely to curb existing home price increases and allow for “Much more manageable, less frenzied buying conditions.”