Inventory Still Falling
AWC Rise, Pendings Fall
Agents Slow to input Data on Holiday Weekend
PENDING: 13,782 ( -84 from last week)
Pending Single Fam: 12,341 ( -104 from last week)
AWC: 4,581 ( +175 from last week)
AWC Single Fam: 4,161 ( +165 from last week)
CLOSED: 1,979 ( -148 from last week)
Closed SF.: 1,772 ( -130 from last week)
Active Listings: 35,771 ( -800 from last week)
Active Single Fam: 27,590 ( -701 from last week)
CLOSED MTD 5/24: 6,335 4/24/09: 6,028
Closed Single Fam: 5,653 4/24/09: 5,416
Our inventory level continues to decline in the greater Phoenix market, as low prices and interest rates continue to draw buyers to the what is now becoming a more limited supply of homes on the market. Pending sales appear to have fallen somewhat, but the number is rising about one a minute as agents are getting back into the office this morning and inputting their contract acceptances. By the time you read this, the number will be pretty flat. The holiday weekend always causes turmoil in the statistics.
AWC contracts continue to rise, but I doubt that those are all new "standard contracts"- some are going to be short sale contracts, which tend to sit in the AWC for some time. It is better that the number goes up then down of course, but the immediacy of those sales is sometimes questionable.
What is more encouraging is that inventory levels continue to fall. The number of listings is actually lower, as since I posted the number above, the inventory has already fallen by 9, as tardy agents input properties that come off the market. We will see that throughout the day, I expect, so this number will continue to fall markedly today.
We are still hearing about a big wave of foreclosures hitting the market in June, and while this is likely true, at worst it seems like it will put us back to our May inventory levels. We do expect strong sales right into October, as we will see a late summer rush to take advantage of the $8000 tax credit for first time homebuyers. This must be utilized by November, so this should hold up housing sales through that period. Hopefully, this will bridge us to the overall economy recovery. Consumer sentiment soared in May, which many analysts equate with consumer spending, so there is getting to be more evidence pointing to eventual recovery. The US markets soared this morning, discounting even the Atomic testing by North Korea. Consumer spending is still considered the prime indicator of the economy.
While I can't publish the numbers, one local group that follows new housing numbers is pointing to a sharp reduction in builder spec inventory levels. Builders have been reducing activity sharply over the last several years, and inventory is being sold off, and not being replaced. Another weekly report is showing a sharp increase in the new home purchasing index; this increase is based on several factors, not the least of them being that the overall number of subdivisions is half of what it was a year ago, as builders sell out, and don't open additional subdivisions. Still, this index is higher than anytime in the last three years at this point of the season, and that is encouraging. The sales to traffic ratio is far better than it was for the last few years, so that is also a sign of increasingly confident consumers.
Where we are going to see trouble for a while yet is in the high end market. Jumbo loans are still difficult to obtain, although not impossible. There is a thin market for homes upwards of a million dollars. There are currently 2871 single family detached homes between 1,000,000 and 10,000,000 on the market, which is well over 10% of all listings. It seems inordinate when only 67 homes in that price range sold in all of April. That makes the supply of million dollar plus homes at 42 months- obviously, this segment is not keeping up with the rest of the market.
The number of single family listings between $0 and $500,000 is 20,917; the number of sales of single family in April in that price category was 7,409: which would give you a supply of 2.82 months! If you can see where I am going with this, it is that prices for homes of good quality and ready to live in at the lower end are in all likelihood already risingl; it is difficult to break those statistics out, as you have to start nitpicking which homes you would exclude from your statistics, like stripped out houses that sell for very low prices. It is very easy to manipulate these statistics to get to whatever outcome you wish, therefore I don't see the need. Without getting bogged down in the details of the statistics, This is not sufficient supply, as buyers typically haven't found enough choice at this level of inventory; historically prices have continued to rise with less than three months supply of homes. This leads to higher demand/(higher prices) for the best homes in the segment, and/or demand for additional product.
We are going to come pretty close to reaching 9000 sales this month, if we don't actually surpass it. I don't think we will blow by 9000, but we should get there. The rest of the summer looks to be set up for similar numbers, I would say. I don't think June is going to be a blockbuster month, as our upward demand keys seems to be flattening out. If we can sustain this level of demand, we will be in very good shape.
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