Birmingham July Real Estate Area Sales Way Off With Tax Credit Expiration

Birmingham Area MLS* Monthly Observations for July 2010

Sales in July declined a stunning 41% to $144,109,737 in July from June’s $243,804,541. This is a decline of 37% from last July, at $227,443,179. This is the worst sales level for July in the last 10 years by a large margin. The expiration of the tax credit seems to have dramatically stalled sales. The twelve month moving average of total dollar sales chart has a new downward hook.

Total unit sales were down 36% at 889 in July from 1,397 in June, a decrease of 508. This is a 31% reduction from July 2009 at 1,298. New sales dropped 61% to 86 homes this month from 261 in June, a decrease of 175 units. Used sales deteriorated 29% to 803 homes in July from 1,136 last month, a decrease of 333 (Sect E p.3).

Inventory continues to increase for Used homes. The month of June showed the highest number of Active  Used homes ever at 12,901. (I’m using last month since agents tend to renew listings quite late so the current month is almost always lower, which presents a somewhat overly “rosy” picture, if it can be called that.) For this month total inventory is up 2% from last year at this time at 13,650 vs. 13,336.

Active New listings decreased to 1,250 in July from 1,459 in June, a decline of 209 units (Sect E p.3). The number of housing permits has increased considerably to 69 in June vs. 21 in the prior month for Jefferson County. Shelby County however declined somewhat (See the web site for details). New inventory is now well below the 1,800 level which reflects more normal pre-2004 levels. Absorption rate for New homes with 6.8 months supply at the reduced sales pace, is better than the 9.2 months last year at this time (Sect E p.3).. In light of the heavy Used inventory, and low sales levels, I would not be in a rush to build! (Sect C p.1 compare to last month and Sect E p.3.) New house inventories in the higher price ranges (above $500,000) remain excessive at over a year. That situation has remained grim for some time now.

Absorption for Used homes in July 2010 shows 12,400 Used Active listings (Sect E p.3). at 13 months of supply. This is slightly worse than the 12.5 months of supply last year at this time (Sect E p.3). The higher price ranges are doing poorly and deteriorating as new listings are adding to the oversupply. The market for houses requiring “Jumbo” loans remains stagnant.  It is somewhat distressing that a number of more affluent areas are getting a lot of new listings. Homewood, Area 230, is the most dramatic example, with used inventory now 387 which is very close to April’s all-time high of 402 Used homes, a 15 month supply. Mountain Brook, Area 200, has 298 Used homes for sale which is a 16 month supply.

Birmingham area Average Days on Market for New houses was 218 compared to last month at 187. The Used homes DOM was 129 in July, compared with 142 last month (Sect A p.18).

Average sales price for Sold New homes increased to $239,996 from $218,341 last month (Sect A p2). Average sales prices for Sold Used homes increased to $153,761 from $164,452 last month (Sect A p2). The twelve month moving average price line for both New and Used homes is heading down, reflecting that most sales activity continues to be on the lower end of the market. (Sect A p2). It’s hard to read too much into average prices with the shifting mix.

TWB 8/8/10


One thought on “Birmingham July Real Estate Area Sales Way Off With Tax Credit Expiration

  1. agagliano2

    The data show exactly what most people thought we would see. That is that the $8,000 gift Uncle Sam gave 1st time buyers was not pulling new buyers into the market, but it was moving future buyers to buy in the present. The majority of homebuyers who planned on buying in 2010 have already bought, so I’m expecting these low numbers to continue through the end of 2010.
    Our housing market will stay depressed until the administration figures out how to create jobs (public or private sector). I’m afraid we are in for a long wait on a housing recovery.
    Andy “The Mortgage Hunter” Gagliano


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