The number of houses for sale in the Greater Des Moines area continues to shrink, providing limited choices for homebuyers wanting to take advantage of record low mortgage interest rates.

Just 2,640 houses were on the market in September, a 38% drop from a year ago and slightly less than the 2,654 for sale in August, according to data from the Des Moines Area Association of Realtors. 

In 2018 and 2019, the number of houses for sale in Central Iowa ranged between 3,094 and 4,252 a month, association data shows. The Greater Des Moines market includes Polk, Dallas, Warren, Jasper, Marion, Madison and Guthrie counties.

“Right now, our nemesis is that we can’t get existing property owners to list their houses for sale,” said Lance Hanson, the association’s president and a Re/Max broker. “I think some potential sellers are taking advantage of the low interest rates and refinancing. I think some are hunkering down because of [COVID-19]. I think others are worried that if their house sells quickly, they don’t have another place lined up.”

Typically by September, the number of houses on the market swells to about 4,000 because of a decline in homebuyers, Hanson said. That hasn’t happened this year, he said.

“By now, things start to slow down – kids are back at school, people are getting ready for the holidays,” Hanson said. “We haven’t had that normal downturn. People are out there trying to buy.”

In September, 1,439 houses were sold in the Greater Des Moines area, outpacing sales a year ago by 22% and those of two years ago by 38%. 

Local home-sale trends mirror what is occurring nationally. In August, the most recent available data, the sale of existing single-family, townhouses, condominiums and co-ops rose 2.4% from July to a seasonally adjust 6 million, according to the National Association of Realtors. Sales were 10.5% higher than a year ago, according to the group. 

"Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market," Lawrence Yun, the national group’s chief economist, said in a news release. "Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery."

Nationally, 1.49 million housing units were for sale in August, 18.6% fewer than the 1.83 million on the market the previous year, the national data shows. 

Hanson, of the Des Moines association, said he expects demand by homebuyers to continue, especially if interest rates remain low.  

Last week, the average 30-year fixed mortgage rate was 2.81%, according to Freddie Mac, the federally chartered mortgage investor. The 30-year fixed rate has been under 3% for 12 weeks.

“The one thing that is saving us right now is the homebuilders – they are going as fast as they can,” Hanson said. “They can’t build them fast enough to meet demand.”

The Des Moines Realtors group’s data for September also showed:
The median home sale price in September was $229,700, nearly 7% higher than a year ago. In August, the median sale price was $240,000.
The average number of days on the market in September was 46, down from August when houses were on the market an average of 50 days. A year ago, houses stayed on the market an average of 55 days. Association data shows that 945 houses sold in less than 30 days in September and 186 sold in 31 to 60 days.
The majority of homebuyers in September – 1,068  used conventional financing to purchase their news homes. In addition, 161 paid cash.