Monthly Observations May 2008
This is a extract from our monthly 140 page report to obtain the full report contact me.
Total dollar sales increased 11.3% to $285,163,449 in May from $256,073,785 in April*. This is a 29.6% reduction from 2007 ($405,298,152). Not to panic! It appears that we are beginning to see “normal” seasonal and month to month variations in sales, which is a healthy sign of a bottoming process.
These two charts show the total dollar sales by month the first, shows the months sequentially the second shows the months stacked on top of each other so you can compare the same month in different years. Click on them for larger versions.
I still believe, signs of a “bottom” are appearing. By bottom, I mean that total sales are no longer just dropping off. A bottom does not mean that things are about to get better, just that they may not get a lot worse. Sellers will have to continue to adjust their expectations in this competitive (slow) market. Things will not be speeding up any time soon. There are buyers out there but they can afford to be very choosy. The sales levels this year are between the 2003 and 2004 levels, and I’d be surprised to see them move outside that range for the next year or so. You can see more of my commentary on the blog at https://tbrander.wordpress.com.
Absorption rates for new homes improved to 7.4 months from 8.2 of inventory last month. This is identical to last year at this time, (Section E page 3). It is only in the higher price ranges (above $500,000) that new house inventories are truly excessive at over a year. Under this price threshold the inventories are fairly reasonable (almost normal), in the 6 to 8 month range. The bigger developers in these lower price ranges are almost sold out (0 to 5 months of supply), with the remaining inventory held mostly in the smaller developments. In short, the builders are doing a decent job of reducing inventory.
Total unit sales improved 6.2% to 1,464 in May from 1,378 in April an improvement of 86 units. New sales improved to 328 homes this month from 325 in April, an improvement of 3 units. Used sales improved to 1,136 homes in May from 1,053 last month, an improvement of 83 (sect E page 3).
The number of months of supply (Absorption) for used homes has been increasing over several months through April with a modest easing to 10.7 months of inventory in May. This is a 1.7 month increase from last year’s level at this time. (See section E page 3)
Birmingham area builders are doing a fair job of reacting to the market, and constraining new construction supply, but consumers who are the sellers of existing houses are having a harder time as the supply of used homes for sale is climbing. The build up of existing housing supply will continue to impact the new housing market for a while.
Good news: There was a 5.5% decline in active listings from 15,387 active listings in April* down to 14,542 in May, a decrease of 845 units. Active New listings decreased to 2,871 in May from 3,308 in April, a decrease of 437 units (E-3). Active Used listings decreased to 11,671 this month from 12,079 last month, a decrease of 408 (page E-3). Since peaking in September, the number of new house active listings has consistently declined as the used market listings have generally remain level or crept upward. (See the graph section C page 1)
Birmingham area Average Days on Market for new houses improved to 143 days as compared to 162 days last month. Used houses deteriorated to 102 days compared to 96 days in April. (sec A page 18). As many of you know we don’t place much credibility in Days On Market (DOM), preferring absorption rates and months of inventory. Call me for details.
Birmingham area Average sales prices for sold new homes increased to $247,957 from $236,520. See chart here. Average sales prices for sold used homes increased to $179,188 from $169,960. Click on chart to enlarge. There has been a somewhat puzzeling increase in new house prices, but it is largely due to decreasing inventory and sales of lower priced houses, that is the mix is getting skewed to higher priced new houses, which is good since that is where the excess inventory is.
*Caution:! All references to last month (and earlier) numbers show revisions. Each month we pick up late entries (i.e. ones made after our prior publication date) to the MLS system.