Market Summary for the Beginning of September
(from Cromford Report’s Daily Observations, September 3, 2020)
Here are the basics – the Arizona Regional MLS numbers for September 1, 2020 compared with September 1, 2019 for all areas & types:
— Active Listings: 8,028 versus 13,609 last year – down 41.0% – and down 5.3% from 8,477 last month.
— Pending Listings: 7,892 versus 6,350 last year – up 24.3% – and up 4.5% from 7,550 last month.
— Under Contract Listings: 13,042 versus 10,318 last year – up 26.4% – and up 5.8% from 12,332 last month.
— Monthly Sales: 9,225 versus 8,916 last year – up 3.5% – but down 12.5% from 10,543 last month.
— Monthly Average Sales Price per Sq. Ft.: $194.85 versus $169.18 last year – up 15.2% – and up 1.9% from $191.16 last month.
— Monthly Median Sales Price: $325,000 versus $280,000 last year – up 16.1% – and up 3.2% from $315,000 last month.
The housing market remains extremely strong and continues to hit news heights. The closings in August were down from July, but this is partly due to August having fewer working days than July. The fact that pending listings and listings under contract rose between August 1 and September 1, tells us that demand is not weakening despite the lower number of closings. The balance between closed sales and contracts that have not yet closed has swung in favor of the latter.
We can see that supply remains very low indeed, but has only declined 0.6% over the past month. We anticipate that supply will start to grow over the next 30 days. This is because we are seeing far more new listings than we observed during the first half of the year. With the average price per square foot up more than 15% it is not surprising that this is tempting a few more sellers. In theory it should be tempting a few less buyers, but the low mortgage interest rates have kept buyer interest very high.
A startling figure is 26.4% – the amount by which listings under contract exceed this time last year. The level of growth is highly unusual.
Once again, supply is low and demand is high, so prices have to rise. The price increases have really started to accelerate over the past 2 months we now see appreciation over 15% measured by monthly $/SF and over 16% when measured by the monthly median sales price. This is even more shocking given that August is usually one of the weakest months of the year for pricing. By the time we get to year end, we can expect these numbers to be even higher.
The market is more stable than last month, with the Cromford® Market Index hovering near its all time high. The expected growth in supply over the coming 3 months should give some welcome relief to buyers. At least they should have a little more choice. However, there will be little to no respite from multiple offers and the ensuing stress levels. We expect price rises to eventually start negatively impacting affordability causing more buyers to drop out of the market and start a cooling cycle. But eventually could mean quite a long time in the current conditions.
Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2020 Cromford Associates LLC and Tamboer Consulting LLC