Birmingham Area MLS* Monthly Observations for August 2009
August was a rough month for sales, sales decreased from July by a larger than normal decline. Dollar sales were down 18% to $181,500,045 in August vs. $221,788,935 in July. That is off 29% from last August ($256,219,765). The next few months will be telling as we enter into the weaker sales season. We are almost certain to see three more months of declining sales, just based on normal seasonality. The first thing I look at every month is how the twelve month moving average line on the total dollar sales chart is trending. I’ll start feeling positive when it stops pointing down which it is not yet doing.
Total unit sales declined by 15.5% to 1,077 in August from 1,275 in July, a decrease of 198. This is a 25% decline from August 2008 (1,441). New sales dropped 14% to 166 homes this month from 194 in July, a drop of 28 units. Used sales dropped 16% to 911 homes in August from 1,081 last month, a decrease of 170 (Sect E p.3).
A disturbing trend: while we have been reporting total inventory numbers as going down pretty much month after month, a close look at the data reveals that the opposite has been happening. This is due to the date sensitivity of how listings are recorded and when during the month they get renewed (call me if you want the details). For the last 7 months (and probably this month also when we look again next month) the used inventory level has been climbing. For this month; total inventory is down 15% from last year at this time at 12,817 vs. 15,128. Active New listings decreased to 1,678 in August from 2,037 in July, a decline of 359 units (Sect E p.3). In spite of the somewhat dismal sales outlook builders are beginning to pour on the juice. The number of housing permits is climbing in the area (132 in July vs. 73 in the prior month for Jefferson County). This acceleration is a concern. The trend is similar in Shelby County (See the web site for details). New inventory is reaching the 1,800 or so level which reflects more normal pre-2004 levels. However, in light of the heavy and increasing Used inventory, and low sales levels, I would not be in a rush to build! (Sect C p.1, and Sect E p.3).
For both new and used homes the months of inventory have been steadily rising (excluding the current month for the reasons cited above). Absorption rates for New homes improved to 9 months from 10 months of inventory last month, and is about even with 9 months last year at this time (Sect E p.3). New house inventories in the higher price ranges (above $500,000) remain excessive at over a year.
August 2009 shows 11,139 Used active listings (Sect E p.3). Absorption for Used homes is slowly climbing now at 12.5 months of supply. This is about the same as last year’s level at this time (Sect E p.3). As with the New home market, the higher price ranges are doing poorly.
The primary reduction in Used homes for sale is occurring in areas 170 North Birmingham/Norwood, 160 Eastlake, and 130 Centerpoint, and indeed some of these areas are beginning to approach normal levels of inventory, while 140 Trussville, 200 Mountain Brook, and 230 Homewood are all up. The market for houses requiring “Jumbo” loans remains challenged and if anything getting worse.
Birmingham area Average Days on Market for New houses was slightly lower at 193 days as compared to 201 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 decreased to 102 from 109 in July (Sect A p.18).
Average sales price for Sold New homes decreased to $231,941 from $234,593 last month (Sect A p2). Average sales prices for Sold Used homes decreased to $156,968 from $163,069 last month (Sect A p2). The twelve month moving average price line on all categories of houses, New, Used, and Total shows a substantial downward slope (Sect A p2). It’s hard to read too much into average prices with the continued absence of higher end sales.
It will be an interesting Fall and not just football. Stay tuned!