Birmingham Area MLS* Monthly Observations August 2008
This summary from our 130 page report see http://tombrander.com for details.
Total dollar sales decreased 10% to $245,815,412 in August from $272,780,234 in July*. August is a “down” month from July so the decline to be expected although the magnitude was a bit worse than I expected (Chart section A page 4). This is a 22% reduction from 2007 ($361,474,187) (page A-4). There are still indications we are better off than many areas of the country, but it is still a tough situation. While we keep reporting year ago figures, they are increasingly meaningless. How are we doing now on a month to month basis? We are beginning to see “normal” sales fluctuations, as opposed to consistently worse drops. I’m really looking for a 3% annual increase in transaction volume, from these levels, after adjusting for the coming fall/winter sales slump. See Caution Rough Times Ahead. A 3% growth would approximate our historic growth rate. The sales levels this month dropped decisively below the 2003 levels, almost to the 2002 level (Chart section a p4) and I’d be surprised to see them move outside the 2002-2004 range.
Sections C and D of the main report present active and absorption data historically by Price Range and by Area. There is a large disparity in performance and trends in different Price Ranges and Areas. Please look at them.
Absorption rates for new homes improved to 8.0 months from 9.0 months of inventory last month, identical to last year at this time (Section E page 3). The last several months have had big retroactive changes in available inventory. The “failure rate”, (expired listings) have been higher and buyers and agents have not been renewing expired listings promptly. Don’t read too much into lower inventory figures and lower absorption as the discouraged sellers generally renew listings, just not quickly. Mainly in the higher price ranges (above $500,000) new house inventories are truly excessive at over a year. Under this price threshold, inventories are fairly reasonable, in the 6 to 8 month range. Bigger developers in lower price ranges are almost sold out (0 to 5 months of supply), remaining inventory is held in the smaller developments. Builders are reducing inventory but slowly.
Total unit sales deteriorated by 5.2% to 1,356 in August from 1,431 in July a decline of 75 units. New sales improved to 297 homes this month from 285 in July, an improvement of 12 units. Used sales declined to 1,059 homes in August from 1,146 last month, a decline of 87 (sect E page 3).
The number of months of supply “absorption” for used homes has been increasing over the
last 7 months with a slight drop in August to 11.4 months of inventory. This is a 1.7 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. The recent article in The Birmingham News details the problems in the local builder community. We provided data to assist them with the article. 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 2,733, having declined in each month since the peak. We believe that there is an increasing amount of “shadow inventory” in both the new and used market places. That is; houses held off the market for various reasons but that really are for sale.
Active New listings decreased to 2,733 in August from 3,185 in July, a decrease of 452 units (E-3). There were 297 new houses sold in the month, so the rest of the reduction is partially due to the higher failure rate, which is the number of houses whose listings have expired or cancelled without a sale, partially offset by a lower number of new listings. Active Used Listings July set a record of 12,480 used homes were for sale, and August now shows as 11,528 but that will probably show as a larger number next month as explained above (page E-3).
Birmingham area Average Days on Market for new houses improved to 130 days as compared to 157 days last month. Used houses deteriorated to 96 days compared to 92 days in July (sec A page 18). Birmingham area Average sales prices for sold new homes increased to $246,987 from $245,466 (Chart sect A p2). Average sales prices for sold used homes decreased to $162,507 from $180,536 (Chart sect A p2).
TWB 9/12/08 *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.