A year ago, Rhode Island’s housing market began to wane amid news of rising mortgage rates and continued low inventory. One year later, sales are still declining, while the median price of homes continues to rise year-over-year. However, third-quarter home sales data recently released by the Rhode Island Association of Realtors shows sales activity has declined significantly, while appreciation in the median sales price of homes sold has weakened, the median price itself remains above that of the third quarter of last year.

RI Realtors reported that the number of single-family homes sold in Rhode Island from July through September dropped 15.2% from Q3 2022. The median price of those sales rose to $410,000, up from $385,000, a 6.5% increase. Annual appreciation in median price had grown by double-digit percentages in the first half of the year but has fallen markedly since.

In Warwick a total of 331 single family homes sold for the third quarter, a decline of 37 from the third quarter of 2021.  The median price was $356,000, an increase of 7.8 percent from Q3 2021.

“Inflation and rising rates have been a game changer for the housing market. Fortunately, Rhode Island’s economic indicators are stable and unemployment is below the national average so we don’t expect a drastic drop in prices. The low supply of homes should insulate prices from falling significantly, if at all, in the near future.” said Agueda Del Borgo, 2022 President of the Rhode Island Association of Realtors.

Given the recent hike in mortgage rates, homeowners have been reluctant to give up their current low interest mortgages, enhancing the scarcity of homes for sale.

Increasing demand from out-of-state buyers has also worsened the inventory shortfall. Buyers from outside of Rhode Island, mainly Massachusetts, Connecticut and New York, accounted for 26.3% of all sales, up from 24.8% last year. In the luxury market of homes sold for $1 million, 50.5% involved out-of-state buyers, up from 50.2% in Q3 2021. Ninety percent of those buyers bought in the coastal counties of Newport, Washington and Bristol counties.

While sales activity in the multifamily home market dropped off by 27.8% from 12 months earlier, the median sales price escalated 14.7% to $430,000. Investors have pushed prices higher to capitalize on rising rents, with the highest prices realized in Newport County.

Condominium sales fell 22.9% from Q3 2021 and the median sales price rose to $320,000, a 17.7% year-over-year increase.