MLS STATS Through 3/16/08

Pending Sales: 5737 (+170 from last week)

Active with Contingency: 1058 (+57 from last week)

Total Contracts: 6795 (+227 from last week)

Closed 3.10-3.16 929 (+247 from last week)

Active listings: 56301 (+313 from last week)

Month to Date Closed 3.16.08 1672


The number of pending contracts continues to grow, although the rate may be falling a bit, as the elasticity law comes into play. Still, undoubtedly, homebuying activity is up substantially from the lows it experienced in the latter half of 2007. Actual closings are not up sharply, although some other measurements showed substantially better sales in February than my metric did. It shows up as about a 12% increase over January. This month is looking pretty good as well. End of the month sales are pretty strong and we have two full weeks left and a day in the following, and that should lead us substantially past February. Four thousand closings in march would not be out of the question, and that would be an improvement, but not good relating to previous Marches. We are in a new time though, and we can't judge it by previous Marches, because those kind of sales numbers are probably not possible again for a while.

There is plenty of reason for optimism, but there is still lingering reason for caution. The number of closings has not kept pace with the increase in pendings or AWC, which means more deals could be falling out due to financing or other issues, or just that deals are taking longer to close. Either way, that isn't a sign of a crisp process, and it means that we are still having troubles. More troubling is that there has been no significant decrease in the number of homes on the market, and if we aren't reducing now at a time of increasing new contracts, it is hard to seen when we will make it through the wave of inventory. It has not increased, but 55k-56K homes on the market is not a positive equilibrium for our market. Something in the 30k-40K would be far healthier. Even that is too many given our history, but it is likely we are going to be joining the rest of the world in having a six month supply of homes on the market long term.

Still, I am guardedly optimistic. Homes under contract are the harbinger of buyer sentiment, and if we are seeing rising activity as opposed to declining activity, buyers may be deciding it is ok to go out and buy and again, and that should be a sign of reaching the beginning of a turnaround.

New home sales have remained pretty flat at an unacceptable number. This is a market that should pick up, as we have a shrinking supply of specs, rates are acceaptably low, and prices have come down substantially as builders have reined in expectations, and the cost of construction materials has decreased substantially. Builders will have a better pricing situation and pricing will be attractive. A qualified new home buyer can call his own shots within reason now. There is an article on CNN that talks about this. So much of our industry is based on psychology, and the overwhelming degree of negative news has been a hindrance the last few years, but we are starting to see the pendulum swing back a bit. Hopefully, we can avert recession, and start back down the path to a healthy market in Arizona.