By Mike Bodeen · 11 March 2024
Listed below are Maricopa County’s February’s sales numbers for both resales and new homes. These numbers are mildly interesting, sort of going against the grain of our conventional thinking of supply and demand. But then again, when has a Phoenix market ever been conventional? Before going there, here are the numbers:
February’s Maricopa County Numbers (All Sales-Not Just MLS)
5,933 closed transactions, up from 5,910 in February 2023 and up 25% from January.
1,345 closed new home sales, up 11% from 1,208 in February 2023 and up 23% from January.
4,588 closed re-sale transactions, are down 2.4% from 4,702 in February 2023 but up 25% from January.
Overall median sales price in February was $467,234, up 6.2% from February 2023 and up 2.7% from January.
Re-sale median sales price was $450,000, up 7.1% from February 2023 and up 2.5% from January.
New home median sales price was $516,215, up 0.3% from February 2023 and up 3.3% from January.
Resale home sales (per the Cromford Report) were weak in February, barely better than February 2023. Look no further than 7% plus mortgage rates for this loss in market share. Also, listing inventory has slightly increased from last month (but by over a thousand units from last year).
New home sales in February rose at a fairly strong clip garnering 23% of the overall market share. As a contrast, three years ago, new home sales were less than 16% of all units sold. An obvious reason for this is the greater flexibility of new home builders to incentivize their sales with below market mortgage rates.
…our current median sales price (per the MLS) is within 4.3% of our all-time record high resale price in the Valley, set back in May of 2022.
New home sales on the other hand, had greater sales from both last year (up 11%) and last month (up 23%), yet low price increases – up only 0.3% from last year, and 3.3% from last month.
Intriguing to me is that our re-sale market which increased inventory and had lower sales, yet had higher price increases. The re-sale median sales price rose 7.1% from one year ago. It has also increased 2.5% from just last month. Per Cromford, our current median sales price (per the MLS) is within 4.3% of our all-time record high resale price in the Valley, set back in May of 2022.
There is a caveat to both new home and resale pricing. For both of these, we don’t know the concessions that sellers paid, which in some cases could be significant. The higher that mortgage rates get, the greater that sellers are usually willing to credit buyers.
So what does this all mean? For normal cause and effect, values should be dropping, but they’re rising – not hugely, but they’re rising. Our big concern, which we might start to experience shortly, is what happens when rates drop. (Broker note: Since writing this snapshot on Friday, Marc 8th, rates have dropped under 7% – our proverbial line in the sand of buyer increased activity)
For buyers, lower rates sounds like good news, except that as rates drop, more buyers enter the marketplace, furthering more competition, and continuing higher prices. And for buyers, that’s not good news.
Mike Bodeen
Market data referenced in this article comes from The Cromford Report.