The statistics have arrived for the first six months of the year. Now is a great time to take stock of how the residential real estate market has performed in 2018. While I see nothing shocking or concerning, there are some notable developments. Once again, a major influence has been listing inventory or lack thereof.
Listing inventory is the product of new listings, so let’s start there. Compared to the first half of 2017, new listings have declined by 5.9%. The reasons for this are hard to explain and impossible to quantify. I believe there are a variety of reasons why new listings have declined in a market that seems to favor the seller. It is my belief that one major reason is the inability, and/or lack of confidence, to secure a place to live when selling their current home. This is a legitimate concern.
The 5.9% decline in new listings has been mirrored by a “pending sales” decline of 6%. This stat measures how may purchase agreements have been accepted, but not closed. This makes logical sense: with 5.9% fewer options, there have been 6% fewer purchase agreements accepted. In addition, closed sales have declined by 7.2% compared to 2017.
While these stats may portray a declining market, that is not the case. The real estate market is very active, particularly in the more modest price ranges. It is common for well marketed and properly priced homes to receive multiple offers quickly with an eventual sale price that exceeds the list price. In fact, strong demand and low supply yielded an average of 100.3% of seller’s list price in June, a record high for any month since at least the beginning of 2003. Meanwhile, upper-bracket segments are better supplied with listings and less competitive.
Sellers have benefited from the lack of supply. Year-to-date, the median sale price is $289,900 which represents an 8.6% increase over 2017. I am keeping a close eye on this statistic. Mortgage interest rates have been increasing; the Fed recently had the seventh increase since 2015. That, combined with the increasing median sale price creates a strain on affordability for buyers, first-time buyers in particular.
We anticipate a strong third quarter for sales. Sales should remain steady with continued high demand and lack of supply.
Andy Fazendin – Owner/Broker