With the summer drawing to a close, our company saw a recent jump in home sales for the first time in months. Within the surrounding area, the number of home sales remained steady, increasing just slightly from 305 to 310.
Transactions are also closing at lightning speed. The time to clear out the entire months inventory actually dipped below 7 months, which surpasses last month’s record as the fastest since before the collapse of the real estate bubble.
However, this increase is merited more in terms of quantity than quality. The median home sale price dropped to $385,00 in August, which is substantially lower than July’s median sale price of $410,000 and notably lower than August 2103, when homes fetched a median price of $401,625.
It appears that buyers continue to face stiff competition in the hunt for their perfect home. Compared to August last year, the available inventory has decreased 13.25%, falling from 2,490 to 2,160. The sold to list ratio remains high, with homes fetching roughly 95.5% of the asking price.
The constraint in inventory presents an interesting conundrum. Available inventory has been falling steadily for several years, and inventory numbers are historically lower in the winter months. This past January, just 1,902 homes were up for sale. To accommodate market demand, we may see a spike in new construction homes, not unlike what the United States experienced prior to the real estate collapse. Conversely, the American economy retains an element of caution- it is possible that supply will continue falling far short of demand as the months and years go on.
Mortgage rates remain low, with August’s interest rates for a 30 year fixed loan averaging just 4.12%. These cheap interest rates are especially encouraging to buyers as economic confidence inches up slowly in the real estate market. From July to August, the Consumer Confidence Board Consumer Confidence Index rose 2.1 points, reaching 92.4. Lynn Franco, Director of Economic Indicators at The Conference Board, cited a rise in job creation and improving business conditions as reasons that the Index has climbed for four straight months.