Sales Activity Figures Flattening but at a sustainable pace; other national statistics.
Pending Sales: 7463 (+3 from last week)
AWC Contracts: 1472 ( +12 from last week)
Total Contracts: 8935 ( +15 from last week)
Active Listings: 54,102 ( -86 from last week)
Closed Escrows: 1,210 ( -30 from last week)
Closed MTD (5.25.08) 3,841
This week's numbers show that that we may be reaching a short term peak in buying activity. Increased pendings have leveled off, although they are still increasing very slightly. It could just be that its a holiday week, but its hard to say. We are likely to finish over 5,000 home sales in May, if the end of the month rule still holds. Last year through May 25th, we had 4,293 sales, and we finished with 5,774. The last week of April produced something like 1600 sales in a shortened week. We should expect a similar amount, and that would put close to 5,400 homes sold. Not up to last year, but not far off. Certainly it would be a nice increase from April. Listings are also creeping down slightly, and I would love to see it slide into the 53K's by next week. Its probably a reach, but its possible. Still, it is a level we haven't seen for a while, save at the Holiday at the beginning of the year, when many people put off putting homes on the market until January.
I also wanted to mention some other news. I should have commented on this last week when the figures first showed up, but I didn't read it closely. The existing home sales for April were
down nationally by 1%, as noted in this MSNBC report. What the report also notes but doesn't emphasize, and this seems to be the case whenever there is good news, is that homes sales were up 6.6% in the West. Home prices are certainly down, and may continue that way in certain locations, but our April sales figures were up sharply, even without the now infamous foreclosure sales inclusive number published by the AZ Republic a few weeks ago. This month will also be better, and if inventory can continue to slide through the summer, then we may see that prices will have stabilized, and more buyers may take the plunge and purchase.
The second bit I want to mention is the report out today the new homes sales report that came out today. Not that it was a gangbusters breakout, but new home sales for April did increase over March by 3.3%, signifying seasonal gain, but also something more important: there is some confidence in the market again for homes. It may not seem like much, but if things were still going south, you could have still seen a drop in sales as buyers wouldn't think it was a good idea. This is actually the case in the south, or more specifically, Florida, who are heavily weighted in the South region's numbers, who really has a problem. Their numbers didn't go up during this period, so that tells me we have more confidence in our market than they do right now. Our market can probably be described as not so bad; it is not good yet, but it could be much worse. We have a fairly low quantity of new home inventory, we have reached less than 1 year inventory of existing homes, our sales trends are going up, and there seems to be some some confidence re-asserting itself in our market. We still have downside risk in home values, but I can tell you that much of that is going to be weighted to the fringe areas. Again, what I would say is, not so bad. The land market is still soft, as builders are either sellers, or if buying, are only buying distressed lots.
The softer market will continue into the fall, but we may have seen the worst of it already, and we may see some solid strength over the summer. At the current market trends, we are likely to do better than June, July, and August last year, when the sales figures showed 5405, 4684, and 4302, respectively. These are numbers we can reach, and again, our current pending trend seems to show that we will.
Tuesday, May 27, 2008
Tuesday, May 20, 2008
UPDATE: APRIL RESALES FIGURE QUESTIONED
I just ran across an article addressing the discrepancy in the April sales figures. Butler's figures were questioned, and have been discredited a bit, for the reasons that I stated in the previous entry as being probably not reasonable as homebuyer activity, and in fact were partially lender repossessions, not sales. This is not homebuyer activity, and I was a little suspicious of that. Here is a link to the article in Republic. April was still a very good month for us, and May should be even better. Just maybe not as optimistic as Butler reported.
MLS STATS 5/12/-5/18/08
MILD IMPROVEMENT IN ALL STATISTICS FOR THE WEEK, APRIL 08 surpasses April 07 sales; First month over month gain in 3 years.
Week of 5/12-5-5/18/08
Pending Sales: 7460 ( +87 from last week)
AWC Contracts: 1460 ( +46 from last week)
Total Contract: 8920 ( +133 from last week)
Active Listings: 54,188 ( -141 from last week)
Closed Escrows 5.12-5.18.08 1,240 ( +326 from last week)
Month to Date (5/18/08) 2,618
The weekly stats continue to show seasonal improvement in the resale market, with pending sales increasing even as the number of closed escrows increases. It shows we are getting a strong supply of new contracts that replace the morphing of AWC contracts into pendings, and that is an excellent sign of health. We certainly are not looking at blockbuster numbers, but we are ahead of April's pace.
I would like to say something about the AZ Republic report last week of 5585 home sales in April. That is higher than my conservative number of 4800+, which is derived from MLS sales only. I use that number for consistency, and I am glad that they are reporting a number that is even higher. I think it likely includes foreclosure sales, which I do not use, as that is often less about homebuyer activity than it is about investment activity. A home purchased at foreclosure is likely to turn up on the market in 6-12 months again, as the investor fixes it up and resells it. Not always, but that is often the case. Still a good month, as the figure they reported was higher than April 07, and the significance of that is it had not happened in 3 years. It speaks as much to the weakness by April 07 as it does to the strength of the recovery, however. We have had, even prior to the boom years, higher sales figures than that. April 2004 was 8889. That was a very good year, and many people think that was a boom time, but April 2003 was 7429, so obviously we are not back to full strength yet.
I do expect May to be a better month than April, and given the growing strength of pending sales, it could be a substantially better month, and I am looking for sales in the MLS to hit well into the 5K's. The Republic figure could hit 6K. That would be a good, and approaching the norm, as May 2002 was at 6,785. May 2003 was at 7428, so we are getting closer to a normal market as far as sales. It is not a perfect comparison, as we certainly have more homes in the city than in 2002-2003, but we have to also look at the challenging mortgage market, inflationary pressures, and negative consumer confidence. It is no small feat that we are as strong as we are, so we have to count our blessings.
The stat I haven't mentioned is the Active listings. This number is stubborn, and it has been in this range for a long while, but it is slowly slipping, and has been for several weeks. The number of listings is going to be critical to the short term value of homes, as it the Supply component of the equation, and it is still too high. It would be great to see that slip below 50K, and I think that would show a recovery in full effect. It would still be too high, but it would denote that maybe the worst was behind us.
All real estate is local, even on a micro scale, and while certain areas of the Metro area are still going to suffer price declines, as inventory and relative lack of uniqeness or features will work against them, some neighborhoods of the city are already firming up. There was an article last week about a new Blandford Home subdivision in Mesa at which people were camped out to get a chance at one of the lots. That is crazy on the surface, but the fact is that attractive neighborhoods still attract people, and this was obviously an attractive area. I could name other core areas, but the point is, certain areas are going to bear more of the brunt of coming price declines more than others. Some areas have bit the bullet already; the west valley sales are doing well, because the prices have seemed to adjust downward to where the Market will support them; Maricopa offers a mixed bag, as there are new homes selling for a lot less than resales, and that is going to affect resale prices for people that paid ultimately too much. The article a few weeks ago Pinal Co. resales was instructive though, in that the drastically increasing amount of resales can be attributed to the prices falling to where the market began to support them.
Another positive week, and a good number of sales for a middle of the month week, and I am increasingly optimistic that is a real recovery.
Week of 5/12-5-5/18/08
Pending Sales: 7460 ( +87 from last week)
AWC Contracts: 1460 ( +46 from last week)
Total Contract: 8920 ( +133 from last week)
Active Listings: 54,188 ( -141 from last week)
Closed Escrows 5.12-5.18.08 1,240 ( +326 from last week)
Month to Date (5/18/08) 2,618
The weekly stats continue to show seasonal improvement in the resale market, with pending sales increasing even as the number of closed escrows increases. It shows we are getting a strong supply of new contracts that replace the morphing of AWC contracts into pendings, and that is an excellent sign of health. We certainly are not looking at blockbuster numbers, but we are ahead of April's pace.
I would like to say something about the AZ Republic report last week of 5585 home sales in April. That is higher than my conservative number of 4800+, which is derived from MLS sales only. I use that number for consistency, and I am glad that they are reporting a number that is even higher. I think it likely includes foreclosure sales, which I do not use, as that is often less about homebuyer activity than it is about investment activity. A home purchased at foreclosure is likely to turn up on the market in 6-12 months again, as the investor fixes it up and resells it. Not always, but that is often the case. Still a good month, as the figure they reported was higher than April 07, and the significance of that is it had not happened in 3 years. It speaks as much to the weakness by April 07 as it does to the strength of the recovery, however. We have had, even prior to the boom years, higher sales figures than that. April 2004 was 8889. That was a very good year, and many people think that was a boom time, but April 2003 was 7429, so obviously we are not back to full strength yet.
I do expect May to be a better month than April, and given the growing strength of pending sales, it could be a substantially better month, and I am looking for sales in the MLS to hit well into the 5K's. The Republic figure could hit 6K. That would be a good, and approaching the norm, as May 2002 was at 6,785. May 2003 was at 7428, so we are getting closer to a normal market as far as sales. It is not a perfect comparison, as we certainly have more homes in the city than in 2002-2003, but we have to also look at the challenging mortgage market, inflationary pressures, and negative consumer confidence. It is no small feat that we are as strong as we are, so we have to count our blessings.
The stat I haven't mentioned is the Active listings. This number is stubborn, and it has been in this range for a long while, but it is slowly slipping, and has been for several weeks. The number of listings is going to be critical to the short term value of homes, as it the Supply component of the equation, and it is still too high. It would be great to see that slip below 50K, and I think that would show a recovery in full effect. It would still be too high, but it would denote that maybe the worst was behind us.
All real estate is local, even on a micro scale, and while certain areas of the Metro area are still going to suffer price declines, as inventory and relative lack of uniqeness or features will work against them, some neighborhoods of the city are already firming up. There was an article last week about a new Blandford Home subdivision in Mesa at which people were camped out to get a chance at one of the lots. That is crazy on the surface, but the fact is that attractive neighborhoods still attract people, and this was obviously an attractive area. I could name other core areas, but the point is, certain areas are going to bear more of the brunt of coming price declines more than others. Some areas have bit the bullet already; the west valley sales are doing well, because the prices have seemed to adjust downward to where the Market will support them; Maricopa offers a mixed bag, as there are new homes selling for a lot less than resales, and that is going to affect resale prices for people that paid ultimately too much. The article a few weeks ago Pinal Co. resales was instructive though, in that the drastically increasing amount of resales can be attributed to the prices falling to where the market began to support them.
Another positive week, and a good number of sales for a middle of the month week, and I am increasingly optimistic that is a real recovery.
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