SIOUX FALLS, S.D. (KELO) — The housing market has rapidly cooled with increased interest rates and the Sioux Falls area has begun to feel the chill, according to a June 2022 monthly report from the Realtor Association of the Sioux Empire Inc. (RASE).

The report was released on July 7.

New listings in the Sioux Falls region decreased by 7.8% to 648 in June compared to June of 2021. Closed sales were down by 18.5% from June of last year and down by 8.3% year to date compared to last year.

Pending sales were still healthy up by 16.2% compared to June of 2021

But, the RASE report said “For the 12-month period spanning July 2021 through June 2022, pending sales in the Sioux Falls region were up 1.9% overall” so the increase is not at the frantic pace of the prior year.

Sioux Falls has been ahead of the pace when it comes to investors buying housing. A study by Stessa, which is a software learning tool for landlords, said that 9.3% of all homes bought in the Sioux Falls metro area were bought by investors. That’s higher than the national rate of 8.5%.

If investors are buying houses in Sioux Falls at a rate higher than the national one, it’s a factor driving up prices in the Sioux Falls metro area.

Investors are buying the less expensive and mid-range expensive houses, according to the Stessa study.

A first quarter of 2022 report from Harvard’s Joint Center for Housing Studies shows that investors made up 28% of all single-family home buys nationally in the first quarter of 2022.

Low-interest rates drew buyers over the past year but investors may have been among those who outbid them, according to the Stessa study.

The overall market demand which was influenced by lower interest rates drove up prices as well.

The RASE report said housing prices continue to increase in the Sioux Falls area. The median sale price increased by 19.2% from $268,500 in June of 2021 to $320,000 in June of this year. The year-to-date increase is 18% from $249,850 to $294,000.

RASE said that based on information from the National Association of Realtors, price growth is expected to moderate as supply grows because the housing supply is slowly improving.