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PAAR president attributes inventory shortage for Peoria area’s drop in home sales

Peoria Area Association of Realtors president Bill McCarthy stands in front of the mural in the WCBU newsroom.
Joe Deacon
Peoria Area Association of Realtors president Bill McCarthy.

Home sales in the Peoria area remain on a downward trajectory amid rising interest rates and fewer properties on the market.

Figures released by the Peoria Area Association of Realtors (PAAR) show third-quarter sales down 8.5% compared with the same time period in 2022, while year-to-date closings for 2023 through the end of September dropped 13.7% from a year ago.

“Mainly, it's just been lack of inventory,” PAAR president Bill McCarthy said in an interview with WCBU. “Averaging right now, we have about 500 homes on the market, and we should probably have about 2,100 homes. So lack of inventory, less sales.”

So far, the region has had 5,008 new listings in 2023. By the end of last year’s third quarter, there had been 6,043 listings, and the previous year had seen 6,808 houses put up for sale.

“Right now we feel the inventory crunch is going to continue. It probably won't break until builders start building. We need some new construction,” said McCarthy.

“It's still very slow. The majority of new construction right now in the Peoria market is custom builds, where the homeowners are hiring the builder to go out and build it. Most of the builders right now aren't doing too many spec homes.”

Sales in the third quarter totaled 1,663, down from 1,817 from July through September of 2022. The average sale price in the third quarter increased to just roughly $188,000, up about $20,000 from a year ago.

McCarthy said the increased costs coupled with climbing interest rates impact what buyers can expect to get for their money.

“It's starting to price some buyers out of the market. What it's mainly doing is it's making buyers buy a little bit less of a house,” he said. “Where before somebody could afford $300,000, now they might be price-wise down to about $250,000.”

With the low inventory, McCarthy said properties are moving very quickly. The average time on market dipped to 21 days in the third quarter — compared with 89 days in 2020.

McCarthy said one positive is that it’s a good time for sellers, but he adds a caveat.

“Sellers are getting more for their houses, so they're benefiting,” he said. “But that's a negative, too; when they go to buy, they're going to be paying more for their (next) house, and it's priced some new home buyers out.”

Peoria’s declining home sales appear to be part of a national trend. The National Association of Realtors reported a 15.4% decline in September sales compared with the same month last year.

McCarthy said he was optimistic market conditions will begin to improve.

Contact Joe at jdeacon@ilstu.edu.