The Average price of a single-family home in Anchorage hit a new high of $456,000 in 2022, even as Anchorage realtors said rising interest rates were beginning to cool the market.

The slowdown is welcome, they said.

That’s an improvement on the frenetic pace seen in the first two years of the pandemic, when buyers faced agonizing bidding wars and some homes sold almost immediately, at a price well above their asking price, they said.

It’s still a seller’s market, said Larry Burke, chairman of the board of Alaska Realtors.

But sales volume has slowed from a year ago and homes are starting to stay on the market longer, for a month, he said. Also, for the first time in a few years, sellers are increasingly offering concessions on homes, such as help with closing costs or sometimes a reduction in the asking price, he said.

“We’re back to a normal market,” Burke said. “It was not normal during the pandemic.”

Still, the impacts of the pandemic continue to ripple through the market, keeping pressure on home prices, Anchorage realtors said.

The pandemic has slowed home construction as inflation, labor shortages and supply chain grunts increased construction costs.

In Anchorage, this has exacerbated a long-term housing shortage. Fewer than 200 single-family homes are currently for sale, leaving less than a month of housing supply on the market.

“It’s supply and demand, as it always has been, and our supply is extremely low,” said D’Ette Owen, chairman of the Anchorage Board of Realtors.

[Earlier coverage: Average price of an Anchorage home tops $420K amid ‘scary’ low inventory]

Anchorage home prices in 2022 are up 7.7% from a year earlier, according to The figures of Alaska Multiple Listing Service, a real estate listing platform.

That’s the highest rate of increase in several years, the data shows. Three years ago, the average home sold for $80,000 less than it does today.

Home prices in recent years have been inflated by rock-bottom interest rates that have led to a surge in demand for homes, real estate agents said. People had more money for a down payment as savings grew, thanks in part to stimulus checks, and people working from home sought larger homes, they said.

But after interest rates started to rise earlier this year, the market began to normalize, Owen said.

The average rate for a 30-year fixed mortgage roughly doubled in 2022, sharply cutting purchasing power, even if it remains below the long-term historical average.

The higher rates drove some home buyers out, which helped reduce demand, real estate agents said. They have also reduced selling incentives as more homeowners stay put to keep their mortgages low.

Now homes are selling near their asking price and multiple offers on homes have become rarer, Owen said.

“He’s been in a correction for six months, but it’s not a severe correction,” she said.

Art Clark, co-owner of Alaska Real Estate Associates, said the average home price continued to rise in the last three months of this year, with prices averaging $459,000.

He and others said they expect prices to continue to rise, at least slightly.

The lack of housing inventory in Anchorage and land available for construction will help ensure that, he said.

“A small increase may be what happens,” he said. “I don’t see what would lead to lower prices.”

• • •