The spring season is in full swing now, which normally means demand should be strong and supply should be falling fast.
Neither of those quite describe the current situation. Demand is indeed getting stronger, but from the unusually weak level at the start of March, it has a long way to go before it could be described as normal, never mind strong. Supply is levelling off and we probably saw the first half-year peak for total active listings on March 29. We saw a lot of listing cancellations in March – the highest number since August 2011. We also saw the highest number for expired listings since June 2011, excluding Decembers which are always abnormally high months for listing expiration. As a result we started April with fewer active listings than we ended March. However, cancelled and expired listings have a habit of coming back as new listings. The overall picture for supply, when adjusted for seasonality, is that it is still growing. It is definitely shrinking for all price ranges under $200,000, but it is also still expanding for all price ranges between $200,000 and $1,000,000. The mid-range buyer’s choices are increasing, which is very unusual for the spring. New listings are arriving at a 10% faster rate than in 2013 and they are sticking around longer before they go under contract.
The buyers we do have are mostly taking their time and showing little sense of urgency.
The good news is that sales are picking up as they should between February and April and average and median sales prices are moving higher as the volume mix shifts towards higher end homes and away from entry level homes. This doesn’t mean that home values are increasing. These are not moving much. It is just that higher end homes are a higher percentage of completed sales (driving the average up) and the cheapest home sales are getting scarcer (driving the median up).
Here are the basic ARMLS numbers for April 1, 2014 relative to April 1, 2013 for all areas & types:
- Active Listings (excluding UCB): 26,442 versus 16,415 last year – up 61.1% – but down 0.4% from 26,589 last month
- Active Listings (including UCB): 29,907 versus 20,670 last year – up 44.7% – and up 1.0% compared with 29,613 last month
- Pending Listings: 7,333 versus 10,658 last year – down 31.2% – but up 13.5% from 6,462 last month
- Under Contract Listings (including Pending & UCB): 10,798 versus 14,913 last year – down 38.1% – but up 13.8% from 9,486 last month
- Monthly Sales: 6,705 versus 8,048 last year – down 16.7% – but up 22.3% from 5,482 last month
- Monthly Average Sales Price per Sq. Ft.: $129.60 versus $113.76 last year – up 13.9% – and up 1.8% from $127.29 last month
- Monthly Median Sales Price: $187,000 versus $169,000 last year – up 10.7% – and up 3.9% from $180,000 last month
After a huge change in the Cromford® Market Index between July and October last year it has been remarkably stable at approximately 84 for the last couple of weeks. The Cromford® Supply Index is moving higher at almost the same rate that the Cromford® Demand Index is moving higher. Thus the overall balance has remained distinctly in favor of buyers and there has been no discernible improvement for sellers.
Sales in March were much higher than February, as they are every year, partly because there are more days in March and partly because there are more buyers in March. However March sales were down almost 17% from March 2013, giving us the lowest March sales total since 2008. Pending listings grew at a very respectable rate between the beginning of March and the beginning of April, up nearly 14%, but they are still 31% below last year. At least that is better than 37% below which is what we reported a month ago.
I am happy to report that we have overtaken the pending listings for 2007, so we now have four years that were slower than 2014 – these are 2001, 2002, 2007 and 2008. We are only very slightly ahead of 2001 and 2002 when the housing stock was dramatically lower than it is now. By rights we should be at least 20% higher than both these years. It shows us that people are moving much less than they used to and the current market is much more influenced by renters than buyers compared with the start of the century.
For Greater Phoenix in March we had 109 sales of homes priced over $1,000,000. This is the highest March number for million dollar homes since 2008. For homes priced at or below $1,000,000 we had 6,503 sales which is the lowest March number since 2008. This divergence between luxury home sales and the rest of the market is quite striking. However there are still plenty of homes over $1,000,000 for sale so supply is not an issue. It must also be remembered that a home priced at $1,025,000 this year may have been $975,000 last year.