New homes are under construction in Spanish Fork on Tuesday, July 16, 2024. (Photo by Spenser Heaps for Utah News Dispatch)
Even though home prices in Utah have grown less than 1% since 2022, Utah in 2024 ranked as the ninth most expensive housing market in the nation.
Statewide, the median sales price of a single-family home hit $547,700 in the fourth quarter of 2024.
That’s according to a new report published Tuesday, marking another yearly iteration of the “State of the State’s Housing Market” published by the University of Utah’s Kem C. Gardner Policy Institute.
The report, written by Jim Wood, senior research fellow and one of the state’s leading housing market experts, paints the latest picture of Utah’s housing market for 2024.
“High but stable housing prices” underscored Utah’s housing market that year, he wrote. “Stable prices, however, offered little relief to potential homebuyers as high interest rates and housing prices excluded many households from homeownership.”
His big takeaway from last year? Utah’s housing marketplace — for both homebuyers and renters — is seeing a “correction” from the COVID-19 era, when low interest rates and new remote work opportunities sparked a homebuying spree, especially in the West.
“We’re living in the shadow of that,” Wood told Utah News Dispatch in an interview Tuesday, adding that when prices skyrocket more than 40% in two years like they did from 2020 to 2022, some level of correction is “inevitable.”
A graphic ranking Utah’s home prices compared to other states. (Courtesy of the Kem C. Gardner Policy Institute of the University of Utah)
But the housing market isn’t imploding like it after the 2008 bubble popped. What’s happening now isn’t as dramatic of a correction. Price increases have slowed — but they’re still every so slightly up. Home building and apartment construction has declined after a record home building boom in 2021. It’s all leveling off as interest rates remain high, squeezing affordability for homebuyers, renters and developers.
“We haven’t seen housing prices go down substantially like some thought would occur,” Wood said. Yes, prices dipped slightly in 2023, he said, by less than 3%, but they came back up slightly in 2024.
That 1% increase since 2022 reflects a “very stable” market, Wood said.
“But we’re still (seeing), unfortunately, very high housing prices,” he said. Today’s high interest rates, hovering around 6.6%, combined with high prices, “introduces into this market a more extreme level of (lack of) affordability. … It’s still a huge issue.”
In Utah’s five largest counties — Salt Lake, Weber, Davis, Utah and Washington — housing prices “are seriously to severely unaffordable,” when comparing median sales prices to median household income, Wood wrote in the report.
Utah’s housing affordability level has only slightly improved from 2022, but not much. In 2022, the state’s “median multiple ratio” — which measures the severity of housing affordability by dividing the median sales price of a home by median household income — was a record 5.7, or “severely unaffordable,” according to the report. Last year, that dipped slightly to 5.1 after housing price growth leveled off, but a ratio of 5.1 is still considered “severely unaffordable.”
Utah’s median multiple ratio scores since 2014, which measures the severity of housing affordability by dividing the median sales prices of a home by median household income. (Courtesy of the Kem C. Gardner Policy Institute of the University of Utah)
Consider that Utah’s median multiple ratio was 3.5 just over 10 years ago, in 2014. That ratio was considered “moderately unaffordable.”
And while rental rates showed little to no change in 2024 (and even dipped in some areas), the average rental rate of all unit types in Salt Lake County increased from $1,582 a month in 2023 to $1,593 in 2024. That’s a less than 1% decrease — but came after rent prices jumped 20.7% in 2021.
As for Utah’s housing shortage? It’s expected to persist since construction has contracted. About 22,000 residential units were permitted in 2024, the lowest number since 2016, according to the report.
“A drop in apartment development accounted for 90% of this decline,” Wood wrote, noting that apartment unit permits fell from 7,622 in 2023 to 4,801 in 2024 — which he described as “the lowest level since the Great Recession.”
However, that’s after the “apartment development boom peaked in 2021, at 14,143 units, leading to an overbuilt market with higher vacancy rates and, in some cases, lower rents,” he wrote.
Today, Salt Lake County has a rental inventory of 160,000 units. Only 1,283 apartment units were permitted in 2024 in that county, making up less than 1% of its inventory. That’s not on pace with 3% growth, so inventory continues to pace behind demand.
“We probably need at least 4,000 or 5,000 (units) if we have consistent growth in our net immigration and kids going from living with their parents and form households,” Wood said.
Housing affordability could be impacting Utah’s growth
With supply continuing to pace behind projected demand, Wood predicted Utah will continue to face high prices and a limited inventory.
“To get an equilibrium, good balance is really tough,” he said. “We’re in a period right now where we had a ton of supply, so the builders cut it off, we got no supply, demand continues to grow, and then by the time the supply is induced, you know it’s a year or two too late so we have a tight market.”
However, Wood noted Utah is feeling the impacts of its housing affordability issues.
“Utah’s growth is slowing down. Employment growth and demographic growth are both just drifting lower and lower,” he said. Last month, Utah’s job growth increased an estimated 2.5% year over year, down from more than 3% job growth in 2019, according to state estimates.
A new residential development is advertising homes for sale in Spanish Fork on Tuesday, July 16, 2024. (Photo by Spenser Heaps for Utah News Dispatch)
Combined with other factors including slowing population growth, Wood said that and demand for lower-priced homes like apartments, townhomes and condominiums show that the state’s housing affordability issues could be having a real impact on its growth.
“Now the question is, why? Why is employment growth slowing down in Utah? A couple of us here at the institute, we’ve discussed that, and we think it has a lot to do with housing prices,” he said.
Anecdotally, Wood said he personally knows of people who have quit their jobs and moved out of the state in search of lower-priced homes.
“We’ve got more people leaving than we’ve had years past because they couldn’t get into the housing market, or they wanted a bigger home and it was too expensive here,” he said. “So we’re probably losing people that we didn’t years ago, and we’re not getting as many coming because of high housing prices.”
Where do we go from here?
Wood said that economic uncertainty and slower rates of population and economic growth will likely put a damper on housing demand in 2025. He also expects residential construction, existing home sales, housing prices and mortgage rates will continue to linger around the same levels as last year.
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Wood forecasted the median sales price of a single-family home to grow only slightly, by 2%, to $558,000, and the median price of a condo, townhome and twin home will go up 3% to $422,000.
He also expects affordability to remain a stark issue, with interest rates projected to stay between 6% and 7%.
Though President Donald Trump has been urging the Federal Reserve to cut interest rates drastically, it remains to be seen what will actually happen later this year and in coming years. But if interest rates do come down, say below 6%, “then you’d have a different landscape,” Wood said.
Home prices would likely increase, along with home building and real estate sales, he said. But low rates could also lead to inflation issues, like what happened after the COVID-19 pandemic.
But based on the current landscape, Wood expects Utah to remain in a real estate holding pattern over the next year or so. Expect to continue to see high prices and high rates.
Read the report below: