The real estate market for farmland rebounded in the third quarter of 2023 following several months of stabilizing prices.
Eastern Kansas recorded few sales, but prices on sold ground pointed to a new record. The average sale price in Iowa declined slightly in the first half of 2023 but was near the highs of mid-2022 at the end of September. Irrigated land in Nebraska was on a record pace, with an average per-acre sale price about $2,000 higher than in the second quarter. South Dakota experienced near record highs, and Wyoming saw strong prices.
Land sales were down significantly in the third quarter across the five states. The limited supply was a significant driver in the market. Interest in farmland as a long-term investment added to the momentum of prices.
Producers are keeping an eye on interest rates and commodity prices, but the market likely was helped by greater stabilization of rates and cooling input costs. Buyers today tend to an existing land base, long-term debt locked at record low rates and several years of profitability. They are leveraging this financial strength to grow their operations. Farmland also remains attractive to those looking for safe, long-term alternatives to the stock market.
Frontier Farm Credit, in conjunction with Farm Credit Services of America, continues to monitor real estate trends. It will release its end-of-year farmland study in January.
Below is a snapshot of completed third quarter sale activity by state:
Eastern Kansas Total sales dropped 75% compared to the same period in 2022, although more sales could be recorded in coming weeks. The average per-acre price on recorded sales was $8,008, nearly double the average price of the previous quarter. Results to date point to a possible new high in the market.
Iowa Third quarter land values showed signs of a slight decrease compared to the same period in 2022 but were higher than the first six months of 2022. The average land quality of sold properties increased, as did the sale price -- $13,035 per acre.
Total cropland sales declined 39% in the third quarter compared to the same period in 2022 and public land auctions were down 34%. Public auctions accounted for nearly 60% of total sales, while realtor and private sales accounted for 40% at 20%, respectively. This was similar to 2022.
Nebraska The average price per acre for dryland cropland was $6,316 per acre, which was consistent with the third quarter of 2022, but $500 to $1,000 higher per acre than the previous two quarters of 2023.
The average per acre price for irrigated ground was $11,280, which is about 15% higher than the previous high recorded in the fourth quarter of 2022. The productivity of sold irrigated ground was at the top end of historical averages.
Total cropland sales were down 45% compared to the third quarter of 2022 and were near record lows. Public auctions declined a near record low.
South Dakota The average per acre price was $8,036, about 7% higher than the previous high in the fourth quarter of 2022 and 26% higher than second quarter of 2023. Productivity of sold ground was at the high end of historical averages.
Total sales declined 52% compared to the same time period in 2022. Land auctions were down 39% in the third quarter. As a percent of total sales, private sales have increased to 47% of all sold ground in 2023.
Wyoming Completed cropland sales in the third quarter decreased 77% compared to the same period in 2022. The limited number and diverse nature of the sales, as well as highest and best use, creates a challenge in determining sales trends. However, the sales reported in the third quarter hit a record average price of $3,521 per acre.