Birmingham Area MLS* Monthly Observations for May 2009
May sales were so-so. Sales increased from April, which always happens. Dollar sales were up 18.6% to $201,231,668 in May vs. $169,689,072 in April. That is off 33.7% from last May ($303,650,067). The first thing I look at every month is how the twelve month moving average line on the total dollar sales chart is looking. I’ll start feeling positive when it stops pointing down. So far there is no sign of that happening.
Total unit sales improved by 3% to 1,151 in May from 1,114 in April, an increase of 37. This is a 26% decline from May 2008 (1,556). New sales deteriorated 12% to 157 homes this month from 178 in April, a drop of 21 units. Used sales improved 6% to 994 homes in May from 936 last month, an increase of 58 (sect E page 3).
A bit of good news: total inventory is down 16% from last year at this time at 12,917 vs. 15,429. Contrast this 16% reduction in inventory with the 34% reduction in sales on a comparable month basis. The drop in sales vs. the lesser drop in inventory is not a good sign. Active New listings decreased to 1.953 in May from 2,306 in April, a decline of 353 units (E-3). While it seems that there are a low number of housing permits in the area (103 in April vs. 97 in the prior month for Jefferson County) the continued increase, now three months in a row, is worrisome. The trend is similar in Shelby County (see the web site for details). New inventory still has to contract to 1,800 or to reach more normal pre-2004 levels, and in light of the heavy used inventory, and low sales levels even that would be high (See the chart on page C.1, and table on page E-3).
Absorption rates for New homes improved to 9 months from 10 months of inventory last month, and is about even with 8 months last year at this time (Section E page 3). New house inventories in the higher price ranges (above $500,000) remain excessive at over a year, and are continuing to see deteriorating sales.
May 2009 shows 10,964 Used active listings (page E-3). Absorption for Used homes had been holding steady at 12 months of supply, level from June to August of 2008 and had been showing modest improvement which has now reversed, and sits at 12 months of inventory. This is about the same as last year’s level at this time (See section E page 3). As with the new home market, the higher price ranges are doing poorly, and deteriorating.
The primary reduction in Used homes for sale is occurring in areas such as 170 North Birmingham/Norwood, 160 Eastlake, 130 Centerpoint; while 140 Trussville, and 200 Mountain Brook (another new record), 230 Homewood were all up. I suspect some sellers in the lower price ranges may simply giving up trying to sell? The market for houses requiring “Jumbo” loans remains challenged. While foreclosures have impacted average prices, a bigger factor is the dramatic reduction in the number of higher priced homes sold. The recent increase in rates will not help this situation.
Birmingham area Average Days on Market for New houses increased to 192 days as compared to 187 days last month. One way to look at DOM is that older inventory is beginning to move, so increases in this number are not all bad! Used houses increased to 110 from 108 in April (sec A page 18).
Average sales price for Sold New homes increased to $232,111 from $214,595 last month (Chart sect A p2). Average sales prices for Sold Used homes increased to $165,785 from $140,482 last month (Chart sect A p2). This was a somewhat surprising jump in both categories. The twelve month moving average line on all categories of houses, New, Used, and total continues to show a substantial downward slope (chart section a-2). It’s hard to read too much into average prices with the absence of higher end sales.
*Caution!: Each month we pick up late entries (i.e. ones made after our prior publication date) to the MLS system. Note that our totals are higher than what the MLS board reports because they apparently omit some areas which are in the MLS system but not in the immediate Birmingham area. We report everything in the system. Since both use consistent methods the % change or reported trend is almost always within a % or 2.