Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.
For the monthly period ending May 15, we are currently recording a sales $/SF of $129.77 averaged for all areas and types across the ARMLS database. This is 0.9% lower than the $130.77 we now measure for April 15. Our forecast range was $127.67 to $132.89 with a mid-point of $130.28. This month the actual result was well within the forecast range, but a little below the mid-point.
On May 15, REO sales across Greater Phoenix (all types) averaged $86.16 per sq. ft. (down 2.1%). Pre-foreclosures and short sales averaged $96.36 (down 0.9%) while normal sales averaged $134.10 (down 1.1%). The market share of normal sales increased again over the last 30 days, moving from 88.2% to 89.5% of sales. REOs lost market share from 7.2% to 6.3%. Short sales and pre-foreclosures also lost market share from 4.6% to 4.3%.
On May 15 the pending listings for all areas & types showed an average list $/SF of $129.54, 0.6% above the reading for April 15. Among those pending listings we have 81.4% normal, up again from 80.7% last month, a higher 8.1% in REOs and a lower 10.5% in short sales and pre-foreclosures. The average pricing for pending listings within Greater Phoenix on May 15 in each category was: $137.64 for normal, $89.16 for short sales & pre-foreclosures and $87.99 for REOs. The latter is lower than last month while the other two are higher. However, the continuing shift towards normal listings and more higher priced homes in the sales mix is expected to keep the average $/SF relatively strong.
Our mid-point forecast for the average monthly sales $/SF on June 15 is $130.60, which is 0.6% higher than the May 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $127.99 to $133.21. This is a modest bounce back after the fall over the last 30 days. However it does not represent a significant move higher, just the normal variability of the monthly numbers.
We continue to expect the price range between $125 and $135 per sq. ft. to be a natural resting point after the rapid rise from $78 that has occurred since September 2011. It will take a big change in market conditions for prices to move significantly out of this range. In the current conditions we expect the strongest pricing of the year to occur between March and June and any possible breakout over $130 is likely to be short-lived. Pricing is likely to show some weakness during the second half of the year due to the seasonal build up in supply and weakening demand once the spring is over. It will take a strong recovery in demand to change this expectation.
Pricing is weakest in those places where inventory has grown the fastest. One example is Gilbert where single family active listings have increased by 108% since the same time last year, more than any other major city. At $126.47 per sq. ft. Gilbert’s pricing is lower now than it was at the start of the year. A large inventory of new homes also exists in Gilbert that is not listed on ARMLS, so sellers and developers have a lot competition from each other and buyers are spoilt for choice.