By Mike Bodeen · 10 June 2024
Phoenix Home Prices Slowing – A New Trend?
Last week I sorta indicated that this week, we’d be looking at how buyer’s agents help buyer’s find that just right home. In the meantime, I’m throwing a change-up to talk about the market and how the winds of pricing are changing. So we ask the question: Is the Phoenix Seller’s winning streak coming to an end?
Looks look it, for several reasons, but it could be temporary. First let’s look at May’s numbers:
Active Listings: 18,044 vs 11,730 last year – up 54% – and up 5.3% from 17,129 last month
Under Contract Listings: 8,324 vs 9,028 last year – down 7.8% – and down 11% from 9,336 last month
Monthly Average Sales Price per Sq. Ft: $298 vs $288 last year – up 3.5% – but down 2.9% from $306.61 last month
Monthly Median Sales Price: $450,000 versus $425,000 last year – up 5.9% – and unchanged from $450,000 last month
There were 7,858 closed transactions, down 5% from 8,255 in May 2023 but up 8% from April.
There were 6,286 closed re-sale transactions, down 3% from 6,467 in May 2023 but up 8% from April.
The overall median sales price in May was $475,000, up 2.5% from May 2023 but down 0.3% from April.
The re-sale median sales price was $460,000, up 2.7% from May 2023 but down 1.1% from April.
The new home median sales price was $520,634, up 2.7% from May 2023 and up 1.0% from April.
There were 1,572 closed new homes, down 12% from 1,788 in May 2023 but up 10% from April.
The most important barometer we check out is the direction of the number of active listings (Supply). In one year, we’ve increased 54% from last year. We’re on track to increase that number by 64% next year at this time if all continues as it currently is. If that were to happen we’d have almost 30,000 listings on the market next June. We’ve not had that many listings on the market since 2011. 2011 from a historical perspective
Next, we look at “Listings Under Contract (Demand).” This is current business activity and is most relevant of where closed sales will end up. (See Chart) In 2010 at this time of year, we had about 20,000 Listings Under Contract. The record (almost 23,000) occurred the same year. Where are we now? We have 8800 Listings Under Contract. That was close to the lowest ever, except for the bummer year of 2007 where in spring of that year, we had 7300 for sale for the same time of year.
Then we look at the number of closed listings, which were 7858 in May. Only the Covid spring of 2020, and 2007, 2008 had lower May sales.
As mortgage rates have been hanging around north of 7% for a number of months, buyers have said in effect, “not going there.” We’re now seeing more price reductions as seller’s attempt to better themselves versus their competition. Buyers may not be aware of this, but they’re gaining more negotiational ground each week. If the current trend continues, we’re likely to see more price drops.
The overall median price was down slightly (0.3%) in May from the previous month, a trend reversal. Look for this to continue if rates don’t get some help. What can fend off this trend? Lower rates can bring more buyers to the table. Combining lower rates with lower prices, will bring many more buyers.
And for a period of time, buyers may find real help in affordability. Wouldn’t that be nice for a change?