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 September 15, we are currently recording a sales $/SF of $126.76 averaged for all areas and types across the ARMLS database. This is almost exactly the same as the $126.78 we now measure for August 15. Our forecast range was $121.05 to $125.99 with a mid-point of $123.52. Last month’s forecast therefore proved to be too pessimistic and the actual result was higher than the top of our range by 77c.
On September 15, REO sales across Greater Phoenix (all types) averaged $90.03 per sq. ft. (up 0.4%). Pre-foreclosures and short sales averaged $101.90 (down 0.4%) while normal sales averaged $129.55 (down 0.3%). The market share of normal sales rose slightly over the last 31 days, moving from 89.4% to 89.5% of sales. REOs lost market share from 6.6% to 6.3%. Short sales and pre-foreclosures gained market share from 4.0% to 4.2%.
On September 15 the pending listings for all areas & types showed an average list $/SF of $127.15, 0.7% below the reading for August 15. Among those pending listings we have 80.9% normal, 8.0% in REOs and 11.2% in short sales and pre-foreclosures. The average pricing for pending listings within Greater Phoenix on September 15 in each category was: $134.32 for normal, $91.09 for short sales & pre-foreclosures and $90.48 for REOs. All of these are is slightly lower than last month.
Our mid-point forecast for the average monthly sales $/SF on October 15 is $125.62, which is 0.9% lower than the September 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $123.11 to $128.13. Our forecast this month is for a fairly small decline in pricing over the next month. After three forecasts that have proven optimistic, last month broke the pattern. Month to month forecasting has been hazardous this year with no clear direction despite considerable volatility from one month to the next. However September 15 surprised us by coming in very similar to August 15, rather than showing a significant decline as we expected.
With demand remaining weak, we still expect the natural price range to remain stuck between $120 and $130 in the next few months.
In the current conditions we believe the strongest pricing of the year has already occurred between March and June. Pricing is likely to show at least some degree of weakness during the last 4 months of the year due to the usual seasonal increase in supply and lower sales volumes. We still need to see a strong recovery in demand to change this expectation.