Housing Report: Spring Homebuying Season Has Slowest Start in 5 Years
Kicking off the spring homebuying season, March sales climbed almost 29 percent over February, according to the RE/MAX National Housing Report, which is the slowest start in five years. March 2019 sales are 8.6 percent lower than March 2018.
March was the eighth consecutive month of year-over-year sales declines and the sixth straight month of year-over-year inventory growth, with a 5.3 percent gain. Housing activity in the report’s 54 markets nationwide also saw the Median Sales price grow by 3.4 percent year-over-year – notably smaller than the year-over-year increases in February (5.5 percent) and January (4.6 percent). However, the median sales price has risen by more than 3 percent year-over-year in 17 of the last 18 months.
From 2015 to 2018, the housing market’s spring sprang to life with an increase in sales from February to March averaging 37 percent. March 2019’s month-over-month increase of 28.8 percent was the smallest since 24.6 percent in 2014.
Days on Market increased to 59 from 57 last March, while Months Supply of Inventory declined year-over-year to 2.7 from 3.0.
While RE/MAX CEO Adam Contos said “it was encouraging to see month-over-month sales improve” last month, he noted that “the seasonal bounce that typically ends the first quarter wasn’t as strong as in the past few years.”
Of the 54 metro areas surveyed in March 2019, the overall average number of home sales is up
28.8 percent compared to February 2019, and down 8.6 percent compared to March 2018. Leading the month-over-month sales percentage increase were Burlington, VT, at +48.3 percent, Wichita, KS, at +46.8 percent, and San Francisco, CA, at +44.3 percent.
Prices Rising… Slowly
Veros® Real Estate Solutions also noted that the appreciation rate was slowing. In a recent report, Veros predicts that properties in the nation’s 100 largest markets will appreciate at a rate of 3.7 percent over the 12 months ending March 1, 2020. According to the VeroFORECAST™ for first quarter 2019, this continues a projected slowing that first appeared in the previous quarter’s report.
Among the states where predictions raise concern are Louisiana, which has half of the ten markets at the bottom of the report’s 100 most-populous markets, and California. The Golden State is expected to continue softening significantly with forecast appreciation for both the Los Angeles and San Diego markets falling well under five percent. The Bay Area is expected to fare only slightly better, with appreciation just above five percent, well below its double-digit readings in the recent past.
Other states where VeroFORECAST projects depreciation or significantly lower appreciation are Illinois, Connecticut, Utah, North Dakota, and Southwest Florida, as well as many New York City boroughs and the major Texas markets of Dallas-Ft. Worth and Houston.
Veros, a specialist in enterprise risk management, collateral valuation services and predictive analytics, bases its quarterly report on data from 349 Metropolitan Statistical Areas, representing 82 percent of U.S. residents.
After a steady rise over many quarters, the forecast has come down from +4.5 percent six months ago to +3.9 percent last quarter and now to +3.7 percent for this quarter. Although this is a big decline over such a short period of time, it is not cataclysmic.
While the further drop is seen as “significant,” according to Eric Fox, Veros VP of Statistical and Economic Modeling and the report’s author, he cautions it does not signal an impending crash.
“We do not see a significant depreciation,” Fox said, “but simply a slowing down of most markets. The overall housing market is still expected to remain healthy as the fundamentals remain solid including historically low interest rates and a strong economy with low unemployment rates.”
Nevertheless, he adds, “The strength of the past few years is expected to dissipate somewhat in most markets.”
Shifting Trends in U.S. Housing Markets
In the current report, both the Top and Bottom Ten are dominated by small-to-modest-sized cities, with one anomaly in each list: Phoenix, the nation’s fifth largest city, has joined the Top 10 while Hartford, with an estimated 2018 population of 1.2 million, has joined one smaller Connecticut market in the Bottom Ten.
A key discriminator between the forecast top and bottom markets is housing supply. A very low housing supply is a feature of the top markets, where prices are expected to increase significantly. Population trends are also a characteristic, with slow or declining population growth contributing to low demand in markets at the lowest ranks of the forecast.
The Top Ten have an average forecasted appreciation of 7.82 percent, off a half percentage point from last quarter’s 8.32 percent Top Ten average, with six of the current Top Ten MSAs continuing from last quarter’s report. However, while the top two of those six – Idaho Falls and Odessa, Texas – rose by 1.6 and .36 percent respectively, the other four are down slightly from last time.
Here are the markets projected to appreciate the most and the least through March 1, 2020:
Top 10 Housing Markets
|1.||Idaho Falls, ID||10.2%|
|3.||Boise City-Nampa, ID||8.7%|
Bottom 10 Housing Markets
|4.||Baton Rouge, LA||-0.8%|
|6.||Shreveport-Bossier City, LA||-0.7%|
|8.||Hartford-West Hartford-East Hartford, CT||-0.3%|
|9.||Norwich-New London, CT||-0.3%|
|10.||Hot Springs, AR||-0.2%|