RENO, Nev. (KOLO) -- The Federal Reserve recently raised its key short-term interest rate by a quarter, and locally, those in the housing industry are keeping a close eye on the effect that could have on the region.
In September alone, 439 single-family homes were sold in the Reno-Sparks area, which is a 28% decrease from September 2017. The median home price for last month stands at $374,000.
Past President of the Reno-Sparks Association of Realtors John Graham says while the home prices are 11 percent higher than September 2017, there is some good news. The region's inventory has increased slightly, with more than 1,300 homes on the market, meaning there is a little more than three months’ worth of inventory.
"Traditionally what you will see if inventory goes up and prices come down, but this time we are seeing inventory going up and prices being stable," said Graham.
With the already pricey housing market, Nick Serrano of Greater Nevada Mortgage says the Federal Reserve increase of interest rates to more than 2% makes things even tighter.
"We have both things happening at the same time," says Serrano. If we didn't have home prices going up so rapidly the past 18 months, we would be able to absorb an interest rate a little bit more. But we have both of those dynamics going on and that is why people feel the pinch of housing affordability."
Though every mortgage rate is different depending on the customer, Serrano says last year's 30-year fixed mortgage rate was around 3.5%. Since the Federal Reserve increased the rates a few times this year, it is now above 5%.
"Overly concerned? No," says Serrano. "Are we paying close attention to it? Yes."
He says that news shouldn't stop potential homeowners from seeking a mortgage, but he does offer advice.
"The key thing for buyers is to feel comfortable with their monthly payment. When they go talk to a lender, when they go talk to a realtor, the most important thing they can bring to us is, this is where I'm comfortable and let us build a loan around that and let us find loans that fit their need," says Serrano.
Both Graham and Serrano say they can only focus on what they can control and that is getting the inventory up to six to eight months.
Serrano also says there is a strong indication the Federal Reserve will raise interest rates a few more times.