Last year was a tough one for the Indiana real estate market.

“Sales from 2022 to 2023 were down 14%,” Mark Fischer, the CEO of the Indiana Realtors Association, said. “We were up year over year in inventory, but we were at a 25 year low on new listings.”

But as the calendar flipped to 2024 and as we inch closer to the spring selling season, Fischer said things have started to pick up.

Data from Altos Research backs up Fischer’s observations. In mid-June 2023, the statewide 90-day average Altos Market Action Index score hit a high for year of 53.99, before sliding down to a trough of 40.03 in mid-January 2024. Altos considers anything above a reading of 30 to be a seller’s market. Since hitting a low point in January, Indiana’s Market Action Index score has been on the rise, hitting a 90-day average of 42.32 as of February 29, 2024.

While Fischer attributes some of the uptick in activity to typical seasonality, he noted that the recent relative stability and even slight decreases in mortgage rates have also contributed.

“Both buyers and sellers are coming back to the market,” Fischer said. “From a seller’s standpoint it may make a bit more sense to sell now, so we are creating some more inventory and buyer are taking advantage of lower rates and more stable home prices.”

Like elsewhere in the country, Indiana has struggled with housing inventory. According to Altos Research, as of Feb. 23, 2024, the 90-day average for single family listings in the state was 9,927, down from 14,314 single family listings in late February 2020.

“It is becoming more of a ‘I need to move so I am going to list my home,’ and it is pretty much always due to a life event and that is really the only way we are seeing inventory come on the market,” Kurt Schuler, the broker-owner of New Albany-based Schuler Bauer ERA , said.

Schuler noted that he has also seen an uptick in the number of contingent offers being submitted on properties as some move up or down-sizing buyers do not want to list their home until they know where they are going next, further exasperating the inventory challenges. With existing inventory down, Schuler said new construction has taken on a larger role in his market.

“New construction has typically averaged around 10% of active listing inventory and in our area right now, new construction has ranged anywhere between 30% to 40% of inventory,” Schuler said.

But slower market conditions in 2023 meant that builders slowed their pace of construction despite the continued low inventory, leading Better Homes and Gardens Real Estate First Realty Group associate broker Alfredo Diamond to feel like their output isn’t enough.

“Very few new construction homes are going up in our area,” Diamond said. “Builders are struggling to find locations or things just aren’t moving along fast enough. I noticed a big develop that is on the table right now with the city and all the local neighbors have their issues with it, concerns about traffic and things and they are trying to shut it down, so things here are just slow with new construction.”

Statewide, as inventory has dwindled over the past four years, the median list price has understandably risen, jumping from a 90-day average of $198,900 in late-February 2020 to $294,900 as of Feb. 23, 2024. Despite the overall size of this increase, the median list price is only up roughly $10,000 compared to a year ago, which Fischer said is helping to convince some on-the-fence buyers to come into the market.

While Rebekah Hanna, a Muncie, Indiana-based RE/MAX agent, agrees that price growth has slowed, tght inventory and higher prices, has caused some fatigue for her buyers.

“I’ve had buyers drop out of the market because they just feel like they are never going to find something,” Hanna said. “In our area, start homes used to be $85,000 or $90,000 and now you can find something under $100,000, but they are barely inhabitable. You can’t get anything you can move into, and I think those people are definitely getting tired. Just the other day I told someone that $230,000 is the new $150,000 and $150,000 is the new $80,000.”

The 90-day average median list price in Muncie has risen from $89,162 pre-pandemic to a new high of $156,895 as of late-February 2024, according to Altos.

Hanna, who noted that recently her buyers have regularly had to compete with at least five offers on a property, said she is telling buyers it is going to take them at least six months to purchase a home.

“If they are willing to work for six months, hopefully we write up enough offer or something comes on the market and we get a jump on it or we find something off market, then they can get into a house,” Hanna said.  

However, even with these challenges, Hannah said her January and February were roughly 10 times busier than in 2023.

Out in Richmond, Indiana, Diamond is facing similar struggles.

“We have a daily average of about 77 houses on the market and there are 35,500 people here,” Diamond said. “When you are talking with your buyers you need to be proactive and set some expectations and just paint a picture that it is a different market, and they need to be patient.”

Despite the challenges, Fischer stands by his optimistic view of Indiana’s 2024 housing market.

“We have a pretty strong market heading into spring,” Fischer said. “I think Indiana continues to grow, we have certain hot markets that are growing faster than the rest of the state, but conservatively we are looking at 7% to 10% growth in sales for the state, so we are predicting a pretty good year for home sales in the state of Indiana.”