By Mike Bodeen · 12 February 2024
First of all, let’s look at January’s sales numbers to see if we can gain some insight as to the direction of our market, since that seems to be the number one question most asked Jonathan and I by friends, family, and clients.
Before that, it’s important to note that we had a mortgage interest rate spike (now back to around 7%) this last week on the heels of the explosive jobs report which has cast doubt that we’ll be seeing Fed rate reductions anytime soon – that’s now on hold.
January’s Sales Activity
7 percent rates seem to be the current line in the sand for buyers. When rates had dropped to the mid 6% range, more buyers came out. When rates were above 7%, we see the result of sales being down, such as today’s report shows.
This is further evidenced by the increase in “listings under contract,” which rose a whopping 45% from last month. Now before you get too thrilled with that number, it’s only slightly better than last year, as it is more normal to have that increased number at the beginning of the year, but it is nonetheless an increase – half full!
Here are the numbers:
Active Listings: 15,574 vs 15,598 last year – down 0.2% – but up 7.1% from 14,543 last month
Listings Under Contract: 7,423 vs 7,810 last year – down 5.0% – but up 45% from 5,127 last month
Monthly Sales: 4,397 versus 4,350 last year – up 1.1% – but down 10.8% from 4,928 last month
Monthly Average Sales Price per Sq. Ft.: $288.95 versus $267.73 last year – up 7.9% – and up 1.4% from $284.89 last month
Monthly Median Sales Price: $430,000 versus $410,000 last year – up 4.9% – but almost unchanged from $429,990 last month
New Home Sales are up 10% vs 2023 but down 21% from last month (December)
New Home median sales prices is $499,990 a 1.1% drop from December 2022 and 2023.
Active listings are basically the same as last year, but up over 7% from last month – a cup more than half full – for buyers.
Sales in January rose slightly (1.1%) vs 2023 but dropped 11% lower than last month – Cup half full – for buyers
The average sales price per square foot (PSF) increased almost 8% from last year and 1.4% from last month – 2 cups more than half full for sellers. The monthly median sales price rose almost 5% from last year, but unchanged form last month. Cup half full for sellers.
New Home Sales pricing was way up (10%) compared to last year, but took a huge drop (21%) from last month. New home median pricing was down 1.1% from last month AND last year. Cup half full for buyers.
New home sales are down 1.1% from last month and last year. Cup half full for buyers.
In summary, there’s no significant market trend yet that we can confidently hang our hat on. Cromford, who we are always thankful to for our stats, are showing 11 cities in a seller’s market, 4 cities in a balanced market and three (Queen Creek, Buckeye, and Maricopa) in a buyer’s market.
Overall, buyers numbers did pretty well this month, but in the most important category, pricing, sellers took home the Oscar.
This is a mixed picture. Closed listing counts remain desperately low at 4,397 per month, only up 1.1% from this time last year. However the number of listings under contract is growing nicely, up 45% from the dismal count at the start of the year. This is slightly better than the 43% we saw a year ago but not enough to signal a dramatic change in mood among buyers. We always expect to see strong growth between January and February and the observation in 2024 is middle-of-the-road.
A year ago the Cromford® Report was markedly more positive about the market than the general sentiment, with many people unwisely predicting a market crash. There is still no sign of a market crash in the short or medium term, but the big difference between this year and 2023 is the strengthening of the incoming supply. We have seen almost 20% more new listings year-to-date than we did in 2023. Many pundits tend to focus almost exclusively on demand and were dismayed by the weakness in demand 12 months ago. However supply is equally important and many of these same pundits failed to notice that unusually weak supply was the key issue in early 2023. That weakness has evaporated and although the active listing counts are still low by long-term standards, they are looking much healthier than last year. The number of active listings without a contract is up 7.1% over the last month. Last year they went down 4.3%. This is a significant difference.
It is always good for a seller to have less competition from other homes. In some price ranges, the competition has increased dramatically since the start of the year, but in others it has barely changed at all.
Single-family active listings priced at $2 million or above have increased by 28% over the last month, rising to 951. This is unusual.
Single-family active listings priced between $500,000 and $2 million have seen an increase of 8%, rising to 5,438. This is normal for the time of year.
Single-family active listings priced below $500,000 have seen a fall of 0.2% to 4,505. This means the low-end of the market is still experiencing tight supply.
Prices are up by almost 8% from this time last year when measured by average $/SF. They are up almost 5% if measured by median sales price. Home prices are up by more than the Consumer Price Index. Market crash forecasters got this completely wrong, and buyers who followed their advice to wait have made a costly mistake.
Volume remains weak but the overall market is still tilted slightly in favor of sellers, with the Cromford® Market Index stable around 117 to 118. This tilt towards sellers is weakening in the upper price ranges however. Buyers with more than $2 million to spend are probably thinking about flexing their negotiating muscles.
Market data referenced in this article comes from The Cromford Report.