What a difference a year makes.

In the beginning of 2022, interest rates were under 4% and home sales nearly mirrored those from a busy 2021.

Fast forward 12 months and interest rates have climbed over 6% while home sales have plummeted.

In January, sales totaled 794, down from 1,155 a year ago, a drop of 31.26%, the Delaware Association of Realtors reported. It's the fourth straight month with sales down at least 30% from the previous year.

But Delaware fared better than the national average, which saw a 36.9% decrease in January, according to the National Association of Realtors.

Rising interest rates are one of the key reasons for falling sales.

For every $100,000 of a 30-year mortgage, a 2% rise in interest rates adds about $115 to the monthly payment. So on a $300,000 home, the rise in interest rates from 4% to 6% adds about $345 per month.

Is there any good news for potential buyers?

In many areas, buyers have more homes to choose from at slightly lower prices.

The median sales price in Delaware decreased from $347,731 in December to $345,293 in January – less than 1%, but still a decrease.

A Feb. 23 search of Wilmington homes for sale on realtor.com found 49 with listing prices that had been reduced recently, ranging from cuts of $999 on a home with a new price of $299,000 to the largest reduction – $300,000 on a home that was down to $3,650,000. The average cut was $22,591.82.

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Meanwhile, the number of homes for sale is rising, with the inventory up 29.4% in January compared with a year ago, from 1,872 units to 2,422 units.

“As we head into the spring market, we expect this trend to continue,” said Chrissy Steele, president of the Delaware Association of Realtors.

The increase in supply is helping buyers, said Lawrence Yun, chief economist at the National Association of Realtors.

"Buyers are beginning to have better negotiating power,” Yun said. “Homes sitting on the market for more than 60 days can be purchased for around 10 percent less than the original list price.”

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What’s the good news for potential sellers?

While prices in some areas have dipped a bit in the past month, the median home sales price compared with a year ago is still higher.

In January, the median price in Delaware was $345,293, an increase of 6.14% from $325,330 in January 2022.

So, sellers are still getting more for their homes than a year ago.

What's the main problem sellers face? Interest rates.

Not only are higher rates shrinking the potential pool of buyers, but if you sell your home, you probably have to face those higher rates if you need to buy another.

“Current interest rates have given some sellers pause, especially those sellers that need a mortgage to replace the home they’re selling,” Steele said.

Reporter Ben Mace covers real estate, housing and development news. Reach him at rmace@gannett.com.

This article originally appeared on Delaware News Journal: Delaware home sales drop as interest rates climb. Who does it help?