This is the first column in a two-part series.
To say that residential real estate is in a state of flux might be an understatement. In a press release issued on July 20, the National Association of Realtors reported that sales of existing homes had “declined for the fifth straight month.” The NAR also reported an increase in existing home inventories across the country.
Just nine days later, the U.S. Census Bureau released statistics showing new home sales fell 8.1% between May and June, down 17.4% year-over-year. Interestingly, the statistics for new homes are based on the date the purchase contract was signed, while the figures for existing homes count closed sales where the purchase contract was signed in the last 30-60 days. The report also found that price increases have slowed in many parts of the country.
Las Cruces is no stranger to the impact of rising mortgage rates and other economic factors on sales of new and existing homes, townhomes and condominiums. According to his Aug. 2 report for the Las Cruces Association of Realtors, leading indicators show how far sales in the Las Cruces area have been affected. For example, consider the percentage of the asking price received by sellers. The suggested retail price to selling price ratio achieved in July was 1.5 percentage points lower than the ratio achieved in June and 0.5 percentage points lower than the ratio achieved a year ago. Other statistics confirm that change is definitely underway.
Days on the market, which reflects the number of days between the date the listing was activated and the date the purchase contract was signed, increased by 50% month-on-month and 80% year-on-year. Absorption rate, which measures the number of months it takes to sell out inventory at the current sales pace, increased 9.5% month-over-month and 12.2% year-over-year.
The percentage of unsold inventory is also on the rise, up 40% between June and July, up 10.5% year-on-year. LCAR also reported that the dollar strength for homes sold in July was 8.9% lower than the dollar strength reported in June and 15.1% lower than total sales reported in July 2021. Did. Dollar strength in July was $60,332,774.
There is no doubt that inventory is increasing, sellers are receiving a lower percentage of the asking price, and it is taking longer to find a buyer. But what about values? National statistics appear to have peaked in many parts of the country. Is Las Cruces the same? Have prices peaked in many parts of the valley? The answer is complex and depends on property type, condition and location. There aren’t enough buyers on the market to buy the entire inventory, but enough to buy the few “best homes for the price” that the inventory has to offer. Sellers continue to have an advantage in that area.
There is one statistic that by itself does not establish a trend, but if it persists, it could indicate where local house prices are headed. That statistic is the median selling price. The median selling price is the price at which half were sold high and half were sold low. The July median selling price of $289,500 was 5.6% higher than the median selling price reported in July 2021, but 3.4% lower than the June median selling price of $294,300. If this trend continues, it indicates that local housing prices are declining.
Now let’s assume that local house prices are softening. What strategies should sellers employ to achieve the best possible price for their property? We’ll have the answers in next week’s column.
See you at the closing ceremony.
Gary Sandler is a full-time National Realtor and President of Gary Sandler Inc., a Las Cruces National Realtor. He loves answering questions and can be reached at 575-642-2292 or [email protected].