Monthly Observations June 2008
This is a summary from our 140 page monthly report, call for details!
Total dollar sales decreased 10% to $266,376,570 in June from $295,810,919 in May*. Normally June is an “up” month so the decline is particularly worrisome
This is a 37.5% reduction from 2007 ($426,326,884). I have been suggesting that we are seeing signs of a bottoming process in the local real estate market, June’s results against a backdrop of high oil prices and failing financial markets and institutions (such as IndyMac which failed yesterday) is making me more pessimistic (page A-4). There are still indications we are better off than many areas of the country, but it is still a tough situation.
For the first 6 months of 2008 total dollar sales are running 28% less than the same period last year. Sellers will have to continue to adjust their expectations in this slow market. We won’t be seeing much improvement any time soon. There are buyers out there, but they can 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. On a unit basis, total sales for the comparable 6 month period are down by 24.3% for all houses and 34.4% for new houses. Absorption rates for new homes improved to 7.8 months from 8.6 months of inventory last month. This is slightly worse than last year at this time (7.5) (Section E page 3). It is mainly in the higher price ranges (above $500,000) that new house inventories are truly excessive at over a year.
Click on the tale on the right for detailed inventory and sales data by price range for the month. (the main report breaks this data out into areas) Under this $500,000 price threshold, except for the under $100,000 homes where the inventory is 9.3 months, 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 deteriorated by 6.8% to 1,415 in June from 1,518 in May a decline of 103 units. New sales
declined to 312 homes this month from 346 in May, a decline of 34 units. Used sales declined to 1,103 homes in June from 1,172 last month, a decline of 69 (sect E page 3). The number of months of supply “absorption” for used homes has been increasing over the last 6 months through June to 11.3 months of inventory. This is a 2 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.
The number of new homes for sale peaked at 3,993 in September of last year, and now sits at 2,876, having
declined in each month since the peak.
Good news: There was a 4.4% decline in active listings from 15,543 active listings in May* down to 14,856 in June, a decrease of 677 units. Active New listings decreased to 2,876 in June from 3,330 in May, a decrease of 454 units (E-3). There were only 312 new houses sold in the month, so the reduction is partially due to the higher failure rate, which is the number of houses whose listings have expired or canceled without a sale, partially offset by a lower number of new listings. Active Used listings decreased to 11,990 this month from 12,213 last month, a decrease of 223 (page E-3).
Birmingham area Average Days on Market for new houses deteriorated to 152 days as compared to 143 days
last month. Used houses improved to 94 days compared to 102 days in May (sec A page 18).
Birmingham area Average sales prices for sold new homes increased to $253,556 from $248,346 (Chart sect A p2). Average sales prices for sold used homes decreased to $169,779 from $178,716 (Chart sect A p2).
*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.