Cooling demand is starting to impact Reno’s red-hot housing market. The median sales price for an existing single-family home fell below $600,000 for the first time since February.

The Reno/Sparks Association of Realtors reported a median home price of $595,000 for Reno in July, down from its record-breaking median of $635,000 the previous month. The report is limited to stick-built, existing single-family homes and does not include townhomes, condominiums, modular homes and new housing.

More in housing:Reno No. 1 among cities with highest rate of home price reductions

The lower median price follows several months of falling demand for the Reno housing market, which has posted a median home price of $600,000 or higher in five of the last six months. 

Since February, unit sales for existing homes have failed to beat the numbers from the previous year for the same period. In July, for example, Reno saw 298 unit sales, down nearly 33% from the same month last year.

The decrease in Reno home sales follows several interest rate hikes as the Fed tries to moderate inflation. The Fed started with its first rate hike in over three years with a 0.25 percentage point increase in March. Since then, the Fed has significantly increased rates with a half-percentage point hike in May and a 0.75 percentage point hike in June, its largest in more than two decades.

The rise in interest rates has priced out many prospective homebuyers, particularly given the high home prices in Reno. The latest numbers signal the return to a more normal market after years of skyrocketing median home prices tipped the scales significantly toward sellers, said Sarah Scattini, president of the Reno/Sparks Association of Realtors.

“We are seeing all the signs of a return to a well-balanced market,” Scattini said. “Buyers have a good selection and can take their time to make the decision that is right for their family and their future.”

More:College students in Reno-Sparks struggle to pay rent as housing affordability diminishes

Neighboring Sparks also saw a dip in median home sales price, although not as much as Reno. The median home price in Sparks for July was $547,480, down less than a percent from the previous month. Sales in Sparks were significantly down, however, at 127 units, a decrease of nearly 37% compared to last year.

In total, Reno-Sparks saw 425 unit sales, which is down by 34% year-over-year. The combined median home price for both cities was $574,510, a decrease of more than 4% from June.

With demand cooling down, homes are continuing to stay in the market longer. The average number of days it takes to get to contract jumped from 14 days in June to 25 days in July. It only took six days to get to contract during the same month last year.

After consistently selling homes above their listing price last year, houses on the market are now selling slightly lower at 99.2% of their original list price. A recent analysis by Realtor.com ranked Reno No. 1 in the nation for reductions in an existing home’s original listing price.

The Reno-Sparks market is also seeing a higher inventory of homes in the market. Active inventory stood at 1,348 in July, up 9% from the previous month and nearly 158% from last year’s 523 units.

Months supply of inventory, which measures how quickly existing inventory would sell out at the current pace of sales without new inventory entering the market, also continues to tick up. Reno-Sparks had 3.2 months of inventory in July, significantly up from less than one month during the same period last year. Typically, six months of inventory denotes a balanced market between buyers and sellers.

The shift toward buyers can be seen in sellers’ willingness to work with buyers, according to Scattini.

“It’s not a full-on buyers’ market but it is shifting to one because homes are sitting longer,” Scattini said. “Sellers are now willing to cooperate with buyers who maybe need some closing cost assistance or credit repair.”

Jason Hidalgo covers business and technology for the Reno Gazette Journal, and also reviews the latest video games. Follow him on Twitter @jasonhidalgo. Like this content? Support local journalism with an RGJ digital subscription.