Indiana homebuyers market improved in July with inventory boost, lower mortgage rates

Yulissa Espinoza and her husband lived in their first home, a modest two-bedroom in Lawrence, for less than a year before realizing it was too small to raise the family they hope someday to have.

So Espinoza, 24, and her partner, 25-year-old Edwin Betancourt, put their starter home up for sale last month. Now, having lost money on their initial home because of a faulty inspection, they're days away from closing on a second, larger house closer to family in Anderson.

Luckily for the couple, who bought two homes in as many years, industry experts say that across Indiana, it's as good a time as any in recent years to buy a home. A steady rise in new listings is slowing down price increases, shifting the market in buyers' favor. Sellers are more often accepting offers below their listing price.

But the picture is less rosy in much of central Indiana, where median sales prices have just started to fall from their all-time high of $320,000 in June and inventory remains limited.

Indiana home sales, new listings up in July

A July report from the Indiana Association of Realtors shows that 5% more homes were listed for sale statewide last month than in July 2023, an inventory boost that helped to push down the median sales price to $264,000. The number of homes listed for sale increased for the fourth straight month to 12,900 average daily listings, nearly 18% higher than the 2023 average of just under 11,000 listings.

With more buyers lured off the sidelines this summer by mortgage interest rates at their lowest point in over a year, Indiana home sales last month rose 6% year-over-year. The rise in sales was less pronounced in central Indiana, but still 3% higher than July 2023.

And mortgage rates seem likely to drop even further in the coming months. Cooling price inflation sets up the Federal Reserve to take action by mid-September that would further reduce the cost of borrowing money.

"If you're a buyer, more inventory gives you more choices ... and that price appreciation slows down," Mark Fisher, CEO of the Indiana Association of Realtors, told IndyStar. "And the financing cost — your monthly payment — will be less now that interest rates are starting to come down."

Falling mortgage rates may lead some prospective buyers to bide their time and wait for borrowing conditions to improve even more, experts say.

But this strategy carries risks, some say.

"(I)f you're trying to time the market for your interest rate," Fisher said, "then you're only going to see more competition from other buyers coming off the sidelines.”

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Middle-income homebuyers win across Indiana

Across the state, cheaper prices have made the market more hospitable to middle-income buyers.

Homes under $250,000 drove the increase in sales from June through July, according to IAR's report, outpacing sales of higher-priced homes in a reversal of recent real estate trends.

The largest year-over-year jumps in sales occurred in midsized metro areas where the median price is lower than the statewide median of $264,000. Columbus, Kokomo, Elkhart and Michigan City all saw sales spikes of 20% or more from last July.

Homes in the 11-county Indianapolis metro area still cost more on average than they did last year, according to IAR data, as the historically low inventory of homes persists. The median sales price in central Indiana was $305,000, an increase from last year but a fall from June's peak.

Annie Caruso, president of the Metropolitan Indianapolis Board of Realtors and an agent at Circle Real Estate, said she's been working with a first-time homebuyer who's feeling the brunt of this region's challenges.

"We just have no inventory," Caruso said, "and the inventory we do have is just not what this person is looking for or within their price range or in their preferred location."

Tough central Indiana market is improving for buyers

Having seen the current central Indiana market from both sides, Espinoza said, the showings and the purchase offers can come fast.

"Houses are flying," she said.

Her home in Lawrence garnered three showings and two offers the day it was listed. The same day the couple toured the home they hope to buy in Anderson, about an hour northeast of Indianapolis in Madison County, they made an offer.

Espinoza was acting on the advice of her real estate agent, Gaby Pitts, whom she met during an event for Hispanic homebuyers earlier this year. Pitts told IndyStar they were fortunate that the home her clients wanted sat on the market for more than a month, forcing the seller to drop the initial listing price by $10,000.

They offered slightly above the $300,000 asking price, which nearly matches the July median in central Indiana, for the Anderson home. It's 40% more costly than their first home, which they can afford because Betancourt switched to a better-paying job in the past year.

"If we would have been in a multiple-offer situation like we saw in previous years, when the market was crazy," Pitts said of the young couple's search, "we would have never been able to get the house."

At just over 1,600 square feet, their new home-to-be features more square footage, an additional bedroom and two bathrooms instead of one. A brick ranch-style house outfitted with a new sleek gray interior, the house sits in a quiet subdivision just east of the verdant Mounds State Park. The couple aims to close on the sale by the end of this month.

"Sometimes, we drive by there again to see if we still have that same feeling we had the first time we saw the home," Espinoza said.

"My husband and I," she added, "we still have that same feeling."

Email IndyStar reporter Jordan Smith at JTsmith@gannett.com . Follow him on X: @jordantsmith09

This article originally appeared on Indianapolis Star: Indiana homebuyers market improved in July with inventory boost, lower mortgage rates