Birmingham Area MLS* Monthly Observations for October 2009
October residential sales were down from September which was to be expected. Normally, there is a pronounced decline from September to October. Dollar sales were down 12% to $170,888,024 in October vs. $193,541,603 in September. That is up 4% from last October ($164,458,151). We are almost certain to see three more months of declining sales, just based on normal seasonality, but it seems that the 1st time homeowners credit is having a positive effect. The first thing I look at every month is how the twelve month moving average line on the total dollar sales chart is trending. This month it was actually even with last month. It is a bit early for outright optimism but…. how things will unfold from here is a real mystery to me.
Total unit sales declined by 6% to 1,121 in October from 1,187 in September, a decrease of 66. This is a 7% improvement from October 2008 (1,043). New sales fell 23% to 183 homes this month from 238 in September, a reduction of 55 units. Used sales dropped 1% to 938 homes in October from 949 last month, a decrease of 11 (Sect E p.3).
A disturbing trend is that 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 9 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 12,238 vs. 14,429.
Active New listings decreased to 1,514 in October from 1,858 in September, a decline of 344 units (Sect E p.3). In September it appears that builders cut back on permits. The number of housing permits has shrunk a bit in the area (54 in September vs. 66 in the prior month for Jefferson County). Shelby County permits jumped a bit (See the web site for details). New inventory is going below 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, (compare it to last month) and Sect E p.3).
For both new and used homes the months of inventory has been steadily rising (excluding the current month for the reasons cited above). Absorption rates for New homes improved to 8 months of inventory, and is about even with 8 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 and that situation has not improved.
October 2009 shows 10,724 Used active listings (Sect E p.3). Absorption for Used homes is slowly climbing now at 12 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 and deteriorating somewhat.
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 is getting worse.
Birmingham area Average Days on Market for New houses increased to 183 days as compared to 143 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 78 from 98 in September (Sect A p.18).
Average sales price for Sold New homes decreased to $199,861 from $223,008 last month (Sect A p2). Average sales prices for Sold Used homes decreased to $143,191 from $148,014 last month (Sect A p2). The twelve month moving average price line for 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.