Sales in September not better than August
Pendings still rising slightly
Inventory rose for the first time all year
Washington battles weighing on September sales?
Median Price trending upward?
Pending: 12,038 ( +14 from last week)
Pending Sfam: 10,543 ( +24 from last week)
AWC: 7,778 ( +45 from last week)
AWC Sfam: 6,744 ( +37 from last week)
Active: 19,296 (+123 from last week)
Active Sfam: 15,136 ( +57 from last week)
Closed 9/19-9/25: 1,565 (-135 from last week)
Closed Sfam: 1,347 ( -95 from last week)
Listings to date in September: 7,895
Closings to date in September: 5,398
Median Price: $114,950 (+$5,950 from August)
This week was really a mixed bag in housing news. You had pendings holding up much better for the most part than expected throughout the summer and holding their gains, which forecasts future decent sales. You also are seeing a couple of trends in the pricing which are encouraging; the median price is showing a substantially higher level than what it was last month, and what it has been all year long, but that could change with the large influx of sales at the end of the month. It usually does, but it still seems likely we are going to log a strong uptick in median price.
The other stat that supports that notion is that median listing prices have also been rising, and the last month, has risen $10,000 per listing. That speaks to either the lower end inventory being cleaned out, or sellers are optimistic about what prices they can get for their homes. As in almost all things, its a mix of the two assuredly. The median listing price for most of the first half of the year was around $119,000; September's Median is $134,900. That is not really a fluke; July had bumped up to $122,500, then August rose to $124,000. Obvious improvements, but also notable as July was the first month that the median list price was equal to or higher than the previous year. July was the same, August was up $5K, and September right now is up $14,900 over last September. It will likely not finish that high, but its still a significant change. Third quarter might be noted as when things turned. Clearly, we have had a change, and seem to be headed in the right direction.
There is other evidence supporting Arizona's fundamentals. Retail sales have been surprisingly strong in Arizona, logging a 7.5% increase over last August. That is not insignificant, and as you can see by the article, it is also not an aberration. If people are willing to spend on cars, they will be willing to spend on homes, which is what we are seeing. Couple that with low interest rates, as well as low prices, and we have been able to maintain a solid level of housing sales throughout the summer months. However, lets take a look at the negative side.
For the first time that I can remember all year, the inventory level went up. It didn't go up a lot, but psychologically, the inventory level falling is what all of us in the inventory have prayed for for the last several years, so its unsettling. However, we have to assess that in the larger picture.
- Inventory was expected to start climbing in July.
- Inventory has reached a "barebones" level; its low enough to start encouraging certain sellers to want to list their homes because they are more optimistic they can sell it.
- This could be a blip, as it appears September sales were forecast by some of the fallout of the Washington bickering that started up in July.
- New resale inventory for September might reach the lowest level of the year, so a big move in inventory doesn't look particularly likely, as pending numbers are holding their own.
For these reasons, it seems like a significant rise in inventory is probably not that likely at this point. We may see some slight moves, but we are in the very bottom of the seasonal trough, so its not particularly significant.
The other downside is that September sales could end up being fairly weak compared to the last several months. They are often weaker in September, but we of course want to see a straight line up, don't we? Even though they might look weaker than the rest of the summer, it still appears they bill blow the doors off last September, so it might not be all that bad. I am still seeing that we will sell upwards of 7700 homes in September- not great, but a a 16% or better improvement over last September. Its really only half-bad news, and that is debatable. This might be as about as good as you could hope for.
The stat that really stands out, if it stands up, is the median pricing. If the median price makes that kind of move now, even when the market is at its seasonal cooling off period, what will it be like in February, March, April? The market fundamentals have mostly pointed to some price increases, for months, really, if you follow my blog, but they have stayed oddly low. I think that is mostly a matter of consumer sentiment, just like the divergence of what consumers are saying about the direction of the economy, and what they are actually doing, which is spending again, as evidenced by the retail numbers. Its the equivalent of saying: "This economy scares me, so I am saving my money and not doing anything." But when the friend points out the subject just bought a new car, he replies, yeah, but its a Small new car." The sentiment is things are still really bad, because for some people they are really bad, but for many, only the sentiment is bad, and the reality is that they are buying cars, trips, boats, and bikes....and houses.
People are doing the same thing with housing now; they speak poorly of the housing economy, but they are out buying in pretty good numbers, but the sentiment is still negative enough to have held prices down while fundamentals should have pushed prices long before now. We are seeing it in submarkets- Wittmann house prices have been up sharply. There wasn't a house selling there above $100,000 a few years ago- now it looks like a decent home on an acre there will be $150,000+, and you will have to fight for it. Same thing in certain other areas that we have tried to invest in. I am not going to forecast any price increases for fourth quarter, but I have a very positive outlook for the end of first quarter 2012. Second quarter could be a foodfight, if inventory stays at the level it is now. If we enter February with less than 18,000 single family homes, look out by April, because it will be tough to buy what you want without a bidding war.
Even though September is looking like a mixed bag, I am encouraged that it seems we bounced off the softness that the idiots in washington cost us with their debt haggling. The uncertainty at that point certainly was the cause of pendings sliding back to lower levels in the 11,000's in early September, and is the reason why we will experience weaker sales this month, and likely October as well. Pendings have recovered to a degree that tells me we will maintain the current course for the next few months, anyway. But, I will not be surprised if the cumulative effect of low inventory and strong demand pushes prices through this period anyway. I am not banking on it, but I won't be surprised either.
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