Birmingham Area MLS* Monthly Observations July 2008:
This is the summary from our 140 page detailed monthly report on Birmingham area residential real estate, details at http://tombrander.com
Total dollar sales decreased 3% to $265,500,039 in July from $273,949,428 in June*. July is a “down” month from June so the decline to be expected (see chart below). This is a 30% reduction from 2007 ($379,164,968). There are still indications we are better off than many areas of the country, but it is still a tough situation. While reporting year ago figures, they are increasingly meaningless., ok we are about 30% lower that last year, get over it. It is how are we doing now on a month to month basis and are we seeing “normal” sales fluctuations, as opposed to consistently worse drops that will be important. What I’m really looking for is a 3% annual increase in transaction volume, from these levels, which would approximate our historic growth rate. Sadly, the remaining months of the year tend to be softer (see chart below).
The sales levels this month dropped slightly below the 2003 levels, and I’d be surprised to see them move outside the 2003-2004 range for the next year.
The chart to the right shows the monthly sales from 1999 to present “stacked ” by month (click to enlarge). Note also that we use a beginning of month convention so August is July data!
Absorption rates for new homes improved to 7.9 months from 8.8 months of inventory last month. This is slightly worse than last year at this time (7.4) (Section E page 3). The last several months have had fairly big retroactive changes in available inventory. It appears that the “failure rate”, (expired listings) has been higher and that buyers and agents have not been as prompt in renewing their expired listings. So don’t read too much into the lower inventory figure and lower absorption as the discouraged sellers generally are renewing listings, just not quickly. It is mainly 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. The builders are reducing inventory but slowly.
Total unit sales deteriorated by 6.4% to 1,368 in July from 1,462 in June a decline of 94 units. New sales declined to 276 homes this month from 326 in June, a decline of 50 units. Used sales declined to 1,092 homes in July from 1,136 last month, a decline of 44 (sect E page 3).
The number of months of supply “absorption” for used homes has been increasing over the last 7 months through July to 11.5 months of inventory. This is a 2 month increase from last year’s level at this time (See section E page 3). With the retroactive changes referred to above, and rounding, it’s fair to say that we are now at a 12 month level of inventory for used houses. Over $700,000 we now see inventory for used houses over 2 years. As of July a record of 12,601 used homes were for sale, and this month now shows as 11,954 but that will probably show as a larger number next month due to the factors explained above (expired listings renewed retroactively).
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 2,817, having declined in each month since the peak.
Active New listings decreased to 2,817 in July from 3,279 in June, a decrease of 462 units (E-3). There were only 276 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 11,954 this month from 12,601 last month, a decrease of 647 (page E-3).
Birmingham area Average Days on Market for new houses deteriorated to 157 days as compared to 152 days last month. Used houses improved to 92 days compared to 94 days in June (sec A page 18). Birmingham area Average sales prices for sold new homes decreased to $245,466 from $253,156 (Chart sect A p2). Average sales prices for sold used homes increased to $180,536 from $168,653 (Chart sect A p2).
TWB 8/09/08 *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.