Inventory falls again, April sales slower than March
Pending sales rising, but may be peaking.
April sales will probably reach 9000, but will they reach 9500?
Pending: 14,150 (+127 from last week)
Pending Sfam: 12,156 ( +133 from last week)
AWC: 7,657 ( +113 from last week)
AWC Sfam: 6,613 ( +115 from last week)
Active: 27,812 ( -616 from last week)
Active Sfam: 22,289 ( -564 from last week)
Closed 4/18-4/23 1,891 (-219 from last week)
Closed Sfam: 1,604 ( -171 from last week)
Closed through 4/24/2011: 6,188
Closed Sfam: 5,188
Listed inventory continues to tumble in the ARMLS market area, as fewer listings and strong sales activity carves away what is sitting on the shelf. Keep in mind that last year, once we got through April, sales activity fell into a lackluster summer season, as the tax credit for purchasing a home expired. That means we literally have no idea how this May will perform; last year it was poor, and combined with a sharp uptick in the number of new listings, the summer fizzled. The combination precipitated a sharp drop in pricing the second part of the year as well.
We seem to have stabilized now in terms of pricing, and demand now seems fairly deep and organic, as it seems our housing demand is a result of an improved outlook on jobs and a deeper faith in the housing market at this price level. We have seen some positive numbers emerging as of late, and we may very well be headed towards a nascent recovery in real estate.
We have also seen some improvement in new home sales. The west region posted a 26% gain in March, according to the commerce department. This is not insignificant. Steve Forbes interviewed an economist who had called a housing shortage to occur in 2011, in part due to normal household creation.
We will see if that bears out, but what could continue to drive sales is the fact that rents for homes are going up- I saw the same statistic of 5% increase somewhere, but I don't recall where I saw it, so I will reference this market observer's blog on the rental market.
Stronger rental rates usually will drive more people to buy-if they are capable of qualifying, anyway. We are reaching somewhat of a breaking point in rents. Rent gets too high, people find alternatives. Especially since equivalent rent to a mortgage is already at a tax disadvantage for most people, consumers will be pushed into purchasing; given current pricing and interest rate levels, it is still an excellent time to buy. There are not as many choices as there have been, but most buyers are still likely to find what they want.
With inventory falling, and new listings continuing a 2011 trend of lagging 15% behind last year, we can probably expect to see some price gains, if sales hold up. It seems that they are more likely to hold up this year than what happened last year, so yes, we could see some prices driving northward for a change. I would caution that we are probably close to peaking on the number of pending sales; its drive upward seems to have run out of energy, and I don't think we will get to 15,000 pending sales this year. given our levels of inventory, that is a good strong number. It is also possible that as the choices continue to dry up for consumers, they will turn toward new housing opportunities as well, which of course, helps the builder and job creation. Many good things come about from smaller inventories of available homes, and we are starting to see those signs- I don't think we will see sharp price appreciation, but I do think we will see strong demand at the current levels.
I do see us finishing substantially behind March's 10,000 sales figure, but we are likely to have a strong final week that will push us to maybe 9300 sales by the time its done. April sales, I think, were affected by the rising gas prices we started to be told to expect in February as a result of the middle east unrest. Reaching 9500 would still show a good strong market, and combined with the drop in inventory, we will still be less than three months supply. I give us an outside chance of reaching 9500, but I think it will fall short. I hope I am wrong, but it will still be an excellent month, and we continue to have strong pending numbers forecasting a good month of May as well, which will be an improvement over last year.
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