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Mid Month Pricing Update and Forecast

Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.

For the monthly period ending August 15, we are currently recording a sales $/SF of $149.14 averaged for all areas and types across the ARMLS database. This is down 1.0% from the $150.60 we now measure for July 15. Our forecast range midpoint was $149.67, with a 90% confidence range of $146.68 to $152.66. The actual result was fairly close to our predicted mid-point, coming in 53c below.

On August 15 the pending listings for all areas & types shows an average list $/SF of $154.28, down 0.06% from the reading for July 15. Among those pending listings we have 95.1% normal, 1.7% in REOs and 3.2% in short sales and pre-foreclosures. This mix is exactly the same as in July.

Our mid-point forecast for the average monthly sales $/SF on September 15 is $149.01, which is 0.1% below the August 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $146.03 to $151.99.

So although last month's decline was a little more expected, we are forecasting a small decline over the next 31 days.

This downward pattern is normal for the time of year and does not reflect any deterioration in market conditions. The luxury market loses a lot of sales volume during the hottest months, whereas the rest of the market slows to a lesser extent. We expect the upward price trend to resume once we get to the end of September.

August 2 - Market Summary for the Beginning of August

Market Summary for the Beginning of August

Starting with the basic ARMLS numbers for August 1, 2017 and comparing them with August 1, 2016 for all areas & types:

  • Active Listings (excluding UCB): 17,412 versus 19,711 last year - down 11.7% - and down 3.7% from 18,087 last month
  • Active Listings (including UCB): 21,484 versus 23,801 last year - down 9.7% - and down 3.7% compared with 22,301 last month
  • Pending Listings: 6,085 versus 6,807 last year - down 10.6% - and down 6.2% from 6,486 last month
  • Under Contract Listings (including Pending, CCBS & UCB): 10,157 versus 10,897 last year - down 6.8% - and down 5.1% from 10,700 last month
  • Monthly Sales: 8,003 versus 7,770 last year - up 3.0% - but down 16.8% from 9,615 last month
  • Monthly Average Sales Price per Sq. Ft.: $148.85 versus $138.39 last year - up 7.6% - but down 1.8% from $151.64 last month
  • Monthly Median Sales Price: $241,000 versus $225,000 last year - up 7.1% - but down 1.6% from $245,000 last month

Supply remains significantly lower than last year, and the gap widened slightly compared with last month in terms of active listings with no contract. The drop in supply over the last month (3.7%) was concentrated in the price range from $225,000 to $250,000 and in the ranges over $1 million. Price ranges below $175,000 have a little more supply than they did last month, a new trend that we have now seen for two months running.

The monthly sales rate is up 3.0% compared with a year ago. Both July 2016 and July 2017 had the same number of working days (20) so we have a fair comparison to draw. Since the year over year growth was 5.7% in June we see a continuing slow downward trend in the advantage that 2017 has over 2016 in sales volume. Growth in the annual sales rate is also slowing which confirms this trend.

We experienced a significant price drop between June and July, but this is no surprise. It happens almost every year, and in fact the drop in 2016 was larger. The effect is primarily due to the decline in luxury home activity. On an annual basis appreciation is running at 7.6% when measured by average $/SF and 7.1% when measured by median sales price. Both of these are very strong compared with general rates of inflation but are unspectacular in the context of the wider housing market. Washington, Oregon, Idaho, Utah and Colorado are seeing even faster appreciation, while California, Nevada and Florida are similar to Arizona. Only Alaska is seeing home prices declining year over year.

Appreciation is fine for the home owner, but translates into loss of affordability for the potential home buyer. Prices are being driven higher by a natural and persistent lack of supply, not irresponsible speculation. In this situation it is normal for prices to rise until they suppress demand enough to match the weak supply and we reach equilibrium. That is fundamental to economic theory. So we should not be surprised if sales volumes lose some of the momentum they have seen during the first half of 2017.

Of course the nature of demand is always in flux. At the moment Arizona's population increase is concentrated in the older age groups which portends strong markets in the housing areas that appeal to this sector. Birth rates are weak and getting weaker, so natural population growth is unlikely to be much of a factor in driving future housing demand. In-migration in key to the state and much of that in-migration has been dominated by retirees, or at least those over 55. This different from the situation prior to 2007 which saw strong in-migration from the under 40s. We anticipate the median age in Greater Phoenix will increase quite markedly over the next decade. This will have a number of economic effects, not just on housing.

July 15 - Mid Month Pricing Update and Forecast

Mid Month Pricing Update and Forecast

Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.

For the monthly period ending July 15, we are currently recording a sales $/SF of $150.52 averaged for all areas and types across the ARMLS database. This is down 0.4% from the $151.10 we now measure for June 15. Our forecast range midpoint was $152.16, with a 90% confidence range of $149.12 to $155.20. Although the actual result fell within the confidence interval, it was well below the mid-point and represented a fall from last month instead of a rise.

On July 15 the pending listings for all areas & types shows an average list $/SF of $154.38, down 0.3% from the reading for June 15. Among those pending listings we have 95.1% normal, 1.7% in REOs and 3.2% in short sales and pre-foreclosures. This mix contains fewer REOs but more short sales and pre-foreclosures than last month. Overall distress continues to fall.

Our mid-point forecast for the average monthly sales $/SF on August 15 is $149.67, which is 0.6 below the July 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $146.68 to $152.66.

So although last month's decline was a little unexpected, we are forecasting a continued decline over the next 31 days.

This downward pattern is normal for the time of year and does not reflect any deterioration in market conditions. The luxury market loses a lot of sales volume during the hottest months, whereas the rest of the market slows to a lesser extent. We expect the upward price trend to resume once we get to the end of September.

Market Summary for the Beginning of July

Starting with the basic ARMLS numbers for July 1, 2017 and comparing them with July 1, 2016 for all areas & types:

  • Active Listings (excluding UCB): 18,087 versus 20,458 last year - down 11.6% - and down 2.1% from 18,476 last month
  • Active Listings (including UCB): 22,301 versus 24,856 last year - down 10.3% - and down 4.2% compared with 23,281 last month
  • Pending Listings: 6,486 versus 6,985 last year - down 6.1% - and down 11.4% from 7,324 last month
  • Under Contract Listings (including Pending, CCBS & UCB): 10,700 versus 11,383 last year - down 6.0% - and down 11.8% from 12,129 last month
  • Monthly Sales: 9,512 versus 8,996 last year - up 5.7 - but down 3.5% from 9,858 last month
  • Monthly Average Sales Price per Sq. Ft.: $151.83 versus $140.97 last year - up 7.7% - and up 0.9% from $150.46 last month
  • Monthly Median Sales Price: $245,000 versus $230,000 last year - up 6.5% - and up 2.1% from $240,000 last month

Supply remains significantly lower than last year, but not quite as much as last month, when there was a 11.6% gap in terms of active listings with no contract. The drop in supply over the last month (2.1%) was concentrated in areas that cater to the 55+ home buyer and higher priced areas. This follows a normal seasonal pattern that repeats every July. Some less expensive areas have a little more supply than last month.

The monthly sales rate is up 5.7% compared with a year ago. Both June 2016 and June 2017 had the same number of working days so at last we have a fair comparison to draw. The last 3 months were all distorted by different working day counts which favored March and May but disadvantaged April. We see a slight downward trend in the advantage that 2017 has over 2016 in sales volume, but almost 6% is still a very positive rise.

In common with the USA as a whole, we are seeing lower counts for pending listings and listings under contract, compared with the same time last year. This fall is quite large but so far has not been matched by a drop in sales. We discussed some of the underlying reasons for this fall in our daily observation for June 7. Despite this disconnect between under contract counts and sales counts, we can detect a slight cooling trend in both numbers. In other words, although sales are up, the demand indicators have been gradually weakening over the past few months. This weakening is hard to detect out there in the real world because has not been as pronounced as the weakening in supply. Hence the balance in the market has continued to get more favorable for sellers rather than buyers.

With prices up almost 8% (based on monthly average $/SF) it should not be surprising that demand is tailing off. If it were increasing in the face of such a strong price increase we would be suspecting the illogical enthusiasm associated with a bubble. As it is, the market is well behaved and shows none of the symptoms we associate with a market bubble.

After 2 years under-performing the rest of the market, we are now seeing improvement in the numbers coming out of the Northeast Valley. This is especially obvious in the Cave Creek and Scottsdale areas. In contrast some parts of the Southeast Valley have cooled off compared with the first part of the year. However Mesa and Queen Creek remain quite buoyant.

The overall changes in the market are quite mild and tricky to detect without close analysis. We will be reporting on some of those changes in the daily observations section over the coming weeks.

Jun 15 - Mid Month Pricing Update and Forecast

Mid Month Pricing Update and Forecast

Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.

For the monthly period ending June 15, we are currently recording a sales $/SF of $151.10 averaged for all areas and types across the ARMLS database. This is up 0.4% from the $150.45 we now measure for May 15. Our forecast range midpoint was $151.94, with a 90% confidence range of $148.90 to $154.98. We were correct in forecasting a rise, but the actual rise was only about half as big as forecast.

On June 15 the pending listings for all areas & types shows an average list $/SF of $154.91, up 0.6% from the reading for May 15. Among those pending listings we have 95.0% normal, 1.8% in REOs and 3.1% in short sales and pre-foreclosures. This mix contains fewer REOs but more short sales and pre-foreclosures than last month.

Our mid-point forecast for the average monthly sales $/SF on July 15 is $152.16, which is 0.7% above the June 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $149.12 to $155.20.

So although last month's rise was somewhat smaller than expected, we are still forecasting a respectable 0.7% increase in prices over the next 30 days.

Supply has been falling quite sharply in the last few weeks while demand is little changed. However, we will shortly be entering the third quarter, a period famous for weaker pricing. This is because the luxury market loses a lot of sales volume during the hottest months, whereas the rest of the market slows to a lesser extent. This is a seasonal effect and does not indicate underlying weakness. We would expect the upward price trend to resume once we get to the end of September.

Jun 2 - Market Summary for the Beginning of June

Market Summary for the Beginning of June

Starting with the basic ARMLS numbers for June 1, 2017 and comparing them with June 1, 2016 for all areas & types:

  • Active Listings (excluding UCB): 18,476 versus 20,979 last year - down 11.9% - and down 3.9% from 19,228 last month
  • Active Listings (including UCB): 23,281 versus 25,941 last year - down 10.3% - and down 4.4% compared with 24,345 last month
  • Pending Listings: 7,324 versus 7,791 last year - down 6.0% - and down 3.0% from 7,552 last month
  • Under Contract Listings (including Pending, CCBS & UCB): 12,129 versus 12,753 last year - down 4.9% - and down 5.2% from 12,796 last month
  • Monthly Sales: 9,805 versus 8,750 last year - up 11.9 - and up 11.1% from 8,825 last month
  • Monthly Average Sales Price per Sq. Ft.: $150.53 versus $142.29 last year - up 5.8% - but down 0.4% from $151.18 last month
  • Monthly Median Sales Price: $240,000 versus $225,198 last year - up 6.6% - and up 3.2% from $232,500 last month

Supply is still significantly lower than last year, but not quite as much as last month, when there was a 13.3% gap in terms of active listings with no contract.

The monthly sales rate is up almost 12% compared with a year ago. This time May 2017 has a one working day advantage over May 2016, which accounts for 4.8% of that rise. In April we saw only a 3% rise, but allowing for the extra working day in April 2016, we get roughly the same result for both months. The year over year comparison adjusted for number of working days is 7.2% for May and 7.8% for April. So although the unadjusted figures suggest May was stronger than April, the truth is that sales faded just a bit on a sales rate per working day basis. We apologize for being so pedantic, but we are looking for real signs of a trend here. The trend is very slightly down.

Further sign that demand is on a weakening trend is coming from the pending and under contract numbers, both of which are down from last year, down from last month and further down from last year than they were last month. These are all consistent signals that demand, though strong, is losing a little steam. The contract ratio confirms this, dropping back from its peak at the beginning of May.

Buyers should not get too excited by these trends because they are so minor. We are still in a market where demand exceeds supply and any change in the balance is quite small. In fact we have seen the most stable readings for the Cromford® Market Index over the last 5 months that we have seen for any 5 month period since 2001.

There are a few changes going on the market nevertheless:

  • townhouse / condo homes are gaining market share over single-family detached homes
  • new homes are gaining market share over re-sales
  • supply is dropping faster in Pinal County than Maricopa County
  • sales volume is picking up in several of the more expensive areas
  • sales volume is dropping in the lowest price ranges, mainly due to the lack of available supply

We have a stable and healthy market in which prices continue to climb well in excess of inflation except in a few isolated areas among the more expensive parts of the valley. At the moment there is little sign of change but there really is no guarantee we won't see something unexpected during June. We scan the numbers on a daily basis looking for anomalies or changes in existing trends. Rest assured that the Cromford® Report will advise you as soon as we see anything important.

May 15 - Mid Month Pricing Update and Forecast

Mid Month Pricing Update and Forecast

Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.

For the monthly period ending May 15, we are currently recording a sales $/SF of $150.42 averaged for all areas and types across the ARMLS database. This is up 0.1% from the $150.25 we now measure for April 15. Our forecast range midpoint was $151.29, with a 90% confidence range of $148.26 to $154.32. We were correct in forecasting last month that the average $/SF would rise less quickly, but after an extremely strong rise between March and April we saw a very small increase over the past month.

On May 15 the pending listings for all areas & types shows an average list $/SF of $153.97, up 1.3% from the reading for April 15. Among those pending listings we have 95.0% normal, 2.0% in REOs and 3.0% in short sales and pre-foreclosures. This mix contains fewer short sales and pre-foreclosures than last month.

Our mid-point forecast for the average monthly sales $/SF on June 15 is $151.94, which is 0.8% above the May 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $148.90 to $154.98.

So although last month's rise was pretty small, we are still expecting a respectable increase in prices over the next 31 days.

Beyond those 31 days we would expect to see 3 months of price weakness as the third quarter sales mix tends to include fewer high end homes than the rest of the year. However there is no sign of supply and demand converging and the overall long term trend is still upwards.

May 2 - Market Summary for the Beginning of May

Market Summary for the Beginning of May

Starting with the basic ARMLS numbers for May 1, 2017 and comparing them with May 1, 2016 for all areas & types:

  • Active Listings (excluding UCB): 19,228 versus 22,171 last year - down 13.3% - and down 2.9% from 19,810 last month
  • Active Listings (including UCB): 24,345 versus 27,298 last year - down 10.4% - and down 1.3% compared with 24,794 last month
  • Pending Listings: 7,552 versus 7,945 last year - down 4.9% - and down 0.3% from 7,572 last month
  • Under Contract Listings (including Pending, CCBS & UCB): 12,796 versus 13,072 last year - down 2.1% - but up 1.9% from 12,556 last month
  • Monthly Sales: 8,779 versus 8,523 last year - up 3.0 - but down 6.3% from 9,365 last month
  • Monthly Average Sales Price per Sq. Ft.: $151.20 versus $141.21 last year - up 7.1% - and up 1.9% from $148.44 last month
  • Monthly Median Sales Price: $232,500 versus $221,000 last year - up 5.2% - and up 1.1% from $230,000 last month

We can see that supply is even further below last year than it was last month, both in total active listings and in active listings with no contract.

The monthly sales rate is down over 6% from last month, but this is a very unfair comparison. March had 23 working days and April, because it had a weekend at both ends, only had 20. With 13% fewer working days we could easily have seen sales drop a lot more than 6%, so demand remained in strong shape throughout April. Sales were up 3% from April 2016, but in 2016 April had 1 extra working day, so that again is a pretty strong result.

Sellers remain in charge of the market in most sectors and price is responding accordingly. The average sales price per sq. ft. is our preferred method of measuring prices and it is up over 7% from last year at this time. The median sales price has stuck at $230,000 for quite some time but we now expect it will pop up to $235,00 in short order. The current reading is up over 5% from last year.

Sales are extremely hampered by lack of supply below $200,000, but above $200,000 supply is more free flowing and sales are up by very large percentages from 2016. Only when we get over $1.5 million does the market start to look less healthy thanks to the abundance of supply at the high end. Despite this, sales volumes of luxury homes have picked up nicely compared to last year, and especially so at the very high end over $3 million.

The contract ratio stands at 66.5 for the overall market, the highest number for the start of any month since August 2013. This number is convincing evidence of a hot market because in 2013, as in 2011 through 2012, the high contract ratios were amplified by the large number of short sales that hung around under contract for a long time without closing. These have disappeared to just a trickle today.

So in summary almost the whole market is humming along with all cylinders firing. However there is little sign that it is going to move up a gear from here. The Cromford® Market Index appears to be making little effort to surpass its recent peak of 147.5 thanks to a very slight weakening in some demand indicators (including listings under contract). We are at a point where the seller remains in firm control but the seller's advantage is no longer growing stronger.

Whether that brings any significant relief to buyers I very much doubt, because we are entering the period, from early May to early October, when active listing counts tends to fall back, leaving even less supply for them to chose from. In fact if they fall any faster than average that may completely counteract the slight fall in demand we are currently seeing.

April 2 - Market Summary for the Beginning of April

Market Summary for the Beginning of April

Starting with the basic ARMLS numbers for April 1, 2017 and comparing them with April 1, 2016 for all areas & types:

  • Active Listings (excluding UCB): 19,810 versus 22,493 last year - down 11.9% - but up 0.8% from 19,648 last month
  • Active Listings (including UCB): 24,794 versus 27,398 last year - down 9.5% - but up 2.2% compared with 24,269 last month
  • Pending Listings: 7,572 versus 7,522 last year - up 0.7% - and up 5.3% from 7,194 last month
  • Under Contract Listings (including Pending, CCBS & UCB): 12,556 versus 12,427 last year - up 1.0% - and up 6.3% from 11,815 last month
  • Monthly Sales: 9,259 versus 8,363 last year - up 10.7% - and up 41.8% from 6,530 last month
  • Monthly Average Sales Price per Sq. Ft.: $148.41 versus $140.88 last year - up 6.1% - and up 0.5% from $147.64 last month
  • Monthly Median Sales Price: $230,000 versus $217,000 last year - up 6.0% - and unchanged from $230,000 last month

Supply is significantly down from last year, especially in terms of active listings that are not in UCB or CCBS status. A drop of 12% is not to be sneezed at and makes life hard for most buyers.

The monthly sales rate is very strong, up almost 11% from last year, though this year over year growth is a little less than we saw last month. Surprisingly, we are not seeing the same growth in pending listings or in listings under contract. These are running close to last year's numbers.

Pricing continues to advance, though not at any alarming rate. In fact the median sales price is unchanged from last month. This just shows one of the disadvantages of medians - they tend to cluster at round numbers, like $230,000, and resist moving by small amounts. Our more reliable indicator, average $/SF indicates an appreciation rate of 6.1%, better than last month's 4.8%.

When we examine the monthly sales rate by price range, things get more interesting. Sales are way down under $175,000, dropping by 29%. Above $175,000, sales have grown 20%. The best performing price ranges are:

  1. $500,000 to $600,000 - up 40%
  2. $350,000 to $400,000 - up 39%
  3. Over $3 million - up 38%
  4. $1 million to $1.5 million - up 35%
  5. $400,000 to $500,000 - up 29%
  6. $800,000 to $1 million - up 29%
  7. $1.5 million to $2 million - up 29%

We note signs of recovery in the higher end of the luxury market, at least in terms of sales volumes.

The weakest price range was $300,000 to $350,000 which only managed to grow 5%.

There is little sign of relief for the supply shortage and buyers must be grateful that prices are rising by only 6.1% per year. It could be a lot worse.

March 15 - Mid Month Pricing Update and Forecast

Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.

For the monthly period ending March 15, we are currently recording a sales $/SF of $146.50 averaged for all areas and types across the ARMLS database. This is down 0.8% from the $147.75 we now measure for February 15. Our forecast range midpoint was $145.09, with a 90% confidence range of $142.04 to $147.84. We were correct in forecasting last month that the average $/SF would fall, but it only fell by about half of the amount we anticipated.

On March 15 the pending listings for all areas & types shows an average list $/SF of $151.12, up 2.1% from the reading for February 15. Among those pending listings we have 93.7% normal, 2.7% in REOs and 3.6% in short sales and pre-foreclosures. This mix contains slightly fewer distressed homes than last month.

Our mid-point forecast for the average monthly sales $/SF on March 15 is $149.19, which is 1.8% above the March 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $146.21 to $152.17.

After the small and expected correction over the last month, we are anticipating another strong move forward over the next 30 days.

Supply and demand remain out of balance and the overall trend is still upwards. However the pending listing count grew much less between February 15 and March 15 than it did in the same period last year. This suggests that demand may be cooling a little.

March 2 - Market Summary for the beginning of March

Market Summary for the Beginning of March

Let us start with the basic ARMLS numbers for March 1, 2017 and compared with March 1, 2016 for all areas & types:

  • Active Listings (excluding UCB): 19,648 versus 22,587 last year - down 13.0% - and down 1.1% from 19,863 last month
  • Active Listings (including UCB): 24,269 versus 27,146 last year - down 10.6% - but up 2.7% compared with 23,632 last month
  • Pending Listings: 7,194 versus 7,214 last year - down 0.3% - but up 18.0% from 6,095 last month
  • Under Contract Listings (including Pending, CCBS & UCB): 11,815 versus 11,773 last year - up 0.4% - and up 19.8% from 9,864 last month
  • Monthly Sales: 6,517 versus 5,805 last year - up 12.3% - and up 8.0% from 6,037 last month
  • Monthly Average Sales Price per Sq. Ft.: $147.69 versus $140.88 last year - up 4.8% - and up 0.5% from $146.88 last month
  • Monthly Median Sales Price: $230,000 versus $213,000 last year - up 8.0% - and up 2.2% from $225,000 last month

Taking a closer look at supply, we can see that total active listings increased slightly over the last month. However, an increasing percentage of these are under contract accepting backups (or claim to be), and if we look only at actives without a contract this number declined from last month. A decline between February 1 and March 1 is usually a clear signal of weak supply, and so it is in 2017, although the supply is much weaker at some price points than others. Active listing counts fell for the price ranges between $50K and $200K, but rose in every other price range. The greatest percentage rise in active listings over the last month was for $800K to $1M which saw an increase of 10%.

Turning to demand we see a healthy increase in closed sales, up more than 12% compared with a year ago. However the comparisons of pending listings and under contract listings are not as impressive, down 0.3% and up 0.4% respectively. Slightly mixed signals here, but certainly not bad news.

As you would expect with weakening supply and strengthening demand, prices continue to rise. The monthly median has finally broken above $225,000 again and reclaimed the $230,000 mark we last saw in October. The more dependable average price per sq. ft. number continues to inch higher with overall appreciation close to 5%.

Under $200K, total supply has fallen another 20% since last year, when it was already tight, so buyers looking for homes in this price range are going find it tough going, as they have for a long time now.

Between $200K and $2M, supply is down about 10% compared with this time last year. However demand has grown much more strongly for the $200K to $600K range than above $600K, so the balance in the market favors sellers under $600K but is more balanced above $600K.

Over $2M, we have roughly the same supply as last year, which is to say, far more than adequate. In most areas it is a buyer's market in this top end with the sales rate a little weaker than a year ago. There is little upward pressure on overall prices, but individual properties will still sell for extremely high numbers if they are desirable enough. this makes our price readings very volatile from month to month.

February Mid Month Pricing Update and Forecast

Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.

For the monthly period ending February 15, we are currently recording a sales $/SF of $147.97 averaged for all areas and types across the ARMLS database. This is up a very strong 2.0% from the $145.07 we now measure for January 15. Our forecast range midpoint was $146.00, with a 90% confidence range of $143.08 to $148.92, so rather than the 0.7% increase we expected we saw 2.0%. This may sound like a big difference but the monthly average $/SF can change quite a bit over a short period. For example between January 16 and January 21 it rose from $144.88 to $147.00, a change of 1.5% in just 6 days.

On February 15 the pending listings for all areas & types shows an average list $/SF of $148.03, down 1.8% from the reading for January 15. Among those pending listings we have 93.4% normal, 2.9% in REOs and 3.7% in short sales and pre-foreclosures. This mix contains fewer distressed homes than last month.

Our mid-point forecast for the average monthly sales $/SF on March 15 is $145.09, which is 1.9% below the February 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $142.04 to $147.84.

Although we correctly predicted a change from flat pricing to an upward trend last month we underestimated the size of the change. Our model is suggesting that the increase was too much too soon and we may see a small correction over the next month.

Despite the expected correction, supply and demand remain out of balance and the overall trend is still upwards.

February 2 - Market Summary for the Beginning of February

Market Summary for the Beginning of February

Let us start with the basic ARMLS numbers for February 1, 2017 and compared with February 1, 2016 for all areas & types:

  • Active Listings (excluding UCB): 19,863 versus 22,096 last year - down 10.1% - but up 2.4% from 19,397 last month
  • Active Listings (including UCB): 23,632 versus 25,731 last year - down 8.2% - but up 5.9% compared with 22,313 last month
  • Pending Listings: 6,095 versus 5,688 last year - up 7.2% - and up 24.8% from 4,885 last month
  • Under Contract Listings (including Pending, CCBS & UCB): 9,864 versus 9,323 last year - up 5.8% - and up 26.4% from 7,801 last month
  • Monthly Sales: 6,006 versus 5,175 last year - up 16.1% - but down 16.0% from 7,153 last month
  • Monthly Average Sales Price per Sq. Ft.: $146.49 versus $139.24 last year - up 5.2% - and up 1.1% from $144.89 last month
  • Monthly Median Sales Price: $225,000 versus $210,000 last year - up 7.1% - but unchanged from $225,000 last month

From the above numbers we can see that overall supply is weaker than last year while demand is stronger. January is always a slow month for closings, but a total over 6,000 is the first we have seen since January 2012 and only the fourth to occur this century. The growth in contracts has not been as strong as the growth in closings, but under contract listing counts are up 5.8% from last year.

New listings have been arriving at a slower rate than last year, adding to the problems faced by buyers. Although the overall number of active listings excluding UCB increased by 2.4% during the month, this is an unusually low growth for January and many areas have experienced an unexpected decline in listings over the past 31 days.

This imbalance between supply and demand is true throughout most of the low and mid price ranges, but is less of a factor in the higher price areas, particularly in the outer locations. While this imbalance persists, it is likely to lead to further price rises. We saw a substantial 1.1% rise in the average price per sq. ft. during last month, but the median sales price remained flat for the second month. The average price per sq. ft. is a better reflection of what is going on.

Top appreciating cities (based on the 12 month change in the annual average $/SF) are:

  1. Arizona City (13.9%)
  2. El Mirage (13.7%)
  3. Tolleson (11.4%)
  4. Maricopa (10.6%)
  5. Laveen (10.4%)
  6. Buckeye (9.4%)
  7. Avondale (9.1%)
  8. Sun City (9.1%)
  9. Sun City West (9.0%)
  10. Litchfield Park (7.6%)
  11. Casa Grande (7.3%)
  12. Phoenix (7.3%)
  13. Queen Creek (7.2%)

The weakest price trends are in:

  1. Gold Canyon (-0.3%)
  2. Scottsdale (1.4%)
  3. Anthem (1.6%)
  4. Paradise Valley (2.6%)
  5. Sun Lakes (3.5%)
  6. Fountain Hills (3.5%)
  7. Cave Creek (4.5%)

January 15 - Mid Month Pricing Update and Forecast

Mid Month Pricing Update and Forecast

Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.

For the monthly period ending January 15, we are currently recording a sales $/SF of $144.94 averaged for all areas and types across the ARMLS database. This is up a mere 0.1% from the $144.85 we now measure for December 15. Our forecast range midpoint was $145.26, with a 90% confidence range of $142.35 to $148.17, so this month the actual pricing came in just 32 cents below the mid-point.

On January 15 the pending listings for all areas & types shows an average list $/SF of $150.71, up 1.6% from the reading for December 15. Among those pending listings we have 91.2% normal, 3.4% in REOs and 3.2% in short sales and pre-foreclosures. This mix contains more distressed homes than last month.

Our mid-point forecast for the average monthly sales $/SF on February 15 is $146.00, which is 0.7% above the January 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $143.08 to $148.92.

Last month we suggested that pricing looked likely to barely change until the end of the year. In fact we have seen little change all the way from the start of November to mid-January.

This situation seems more likely to change over the next 3 months with an upward trend re-emerging.

January 2 - Market Summary for the Beginning of 2017

Market Summary for the Beginning of 2017

Let us start with the basic ARMLS numbers for January 1, 2017 and compared with January 1, 2016 for all areas & types:

  • Active Listings (excluding UCB): 19,397 versus 20,073 last year - down 3.4% - and down 7.3% from 20,928 last month
  • Active Listings (including UCB): 22,313 versus 22,883 last year - down 2.5% - and down 9.0% compared with 24,514 last month
  • Pending Listings: 4,885 versus 4,865 last year - up 0.4% - but down 15.5% from 5,782 last month
  • Under Contract Listings (including Pending, CCBS & UCB): 7,801 versus 7,675 last year - up 1.6% - but down 16.7% from 9,368 last month
  • Monthly Sales: 7,183 versus 6,770 last year - up 6.1% - and up 4.0% from 6,906 last month
  • Monthly Average Sales Price per Sq. Ft.: $144.77 versus $138.07 last year - up 4.9% - and up 0.2% from $144.55 last month
  • Monthly Median Sales Price: $225,000 versus $217,000 last year - up 3.7% - but unchanged from $225,000 last month

As we suggested they might last month, sales volumes in December are back to a normal comparison with a year earlier. In fact 6.1% annual growth is slightly less than we saw for most of 2016. The increased interest rates may have taken just a little wind out of the sails. However the large increase in loan approval rates more than compensates for the reduced affordability.

The 1.6% increase in under contract listings compared with a year ago suggests that we still have a decent level of demand and the active listing counts above mean that those looking for homes have relatively slim pickings to choose from right now. No doubt buyers are hoping for a deluge of new listings arriving over the next 3 months. We shall have to wait to see if sellers are willing to oblige.

The mid range from $250,000 to $400,000 is where we see the greatest disparity between supply and demand at this point. Supply is not weak in this price range, but demand has grown a lot since this time last year, roughly 25%, and if it continues there should be no difficulty or delays for sellers who price their homes right. At the higher price ranges the market is somewhat stronger than it was last year in January, but demand varies greatly depending on location and the style of the homes. Locations within close reach of downtown facilities are in strong demand and modern contemporary styles are very popular at the moment. Distant spots with mountain and golf course views are suffering from reduced enthusiasm. We can probably blame some of this on Canadian buyers, who have been conspicuous by their absence since mid 2015. The stronger dollar has kept most foreign buyers away and made sellers of many foreign residents who already own property here.

In summary, the market is looking very healthy and favoring sellers over buyers in most segments.

December 15 - Mid Month Pricing Update and Forecast

Mid Month Pricing Update and Forecast

Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.

For the monthly period ending December 15, we are currently recording a sales $/SF of $144.78 averaged for all areas and types across the ARMLS database. This is down 0.5% from the $145.45 we now measure for November 15. Our forecast range midpoint was $145.81, with a 90% confidence range of $142.89 to $148.73, so this month the actual pricing came in slightly below the mid-point but still well within the 90% confidence bounds.

On December 15 the pending listings for all areas & types shows an average list $/SF of $148.33, up 0.3% from the reading for November 15. Among those pending listings we have 92.3% normal, 3.0% in REOs and 4.7% in short sales and pre-foreclosures. This mix is little different from last month.

Our mid-point forecast for the average monthly sales $/SF on January 15 is $145.26, which is 0.3% above the December 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $142.35 to $148.17.

After two months of strong upward movement in September and October, pricing has barely changed over the last 2 months. This situation looks likely to persist to the end of the year.

December 2 - Market Summary for the Beginning of December

Market Summary for the Beginning of December

Let us start with the basic ARMLS numbers for December 1, 2016 relative to December 1, 2015 for all areas & types:

  • Active Listings (excluding UCB): 20,928 versus 21,493 last year - down 2.6% - and down 0.5% from 21,028 last month
  • Active Listings (including UCB): 24,514 versus 24,898 last year - down 1.5% - and down 1.4% compared with 24,862 last month
  • Pending Listings: 5,782 versus 6,147 last year - down 5.9% - and down 4.4% from 6,050 last month
  • Under Contract Listings (including Pending, CCBS & UCB): 9,368 versus 9,552 last year - down 1.9% - and down 5.2% from 9,884 last month
  • Monthly Sales: 6,910 versus 5,273 last year - up 31.0% - but down 2.7% from 7,100 last month
  • Monthly Average Sales Price per Sq. Ft.: $144.48 versus $135.49 last year - up 6.6% - and down 0.2% from $144.74 last month
  • Monthly Median Sales Price: $225,000 versus $210,000 last year - up 7.1% - but down 1.7% from $229,000 last month

Just as for October, the sales count for November was very impressive, but the 31% gain over last year is an exaggeration of the real situation. We refer you to the daily observation for December 1 for the full details behind it, but the underlying real sales growth is a little less impressive at 16%, about half the headline number. The true underlying number of 16% is still pretty good however and there is no doubt that demand is stronger than it was a year ago. It is possible that some of the recent demand is a result of buyers trying to close quickly, now that interest rates have climbed sharply. They may have been able to lock in the lower rates that prevailed in October. Right now at over 4% for a 30 year fixed conforming loan, they are at the highest they have been all year and we suspect this may dampen buyers' enthusiasm slightly in the weeks ahead. Certainly the listings under contract are down from last year, as are the pending listings count. We suspect the December sales numbers may not look quite as impressive as the October and November ones. December was a bumper month in 2015 while October and November were weak.

Pricing action will have slightly disappointed sellers, down 0.2% in average $/SF and down 1.7% in median sales price since October. I would not get too concerned about that however, as the mix trended in favor of smaller homes, with the average size of homes sold dropping by 1.2% from 1,968 in October to 1,944 in November.

Optimists will no doubt grab the headline sales number and proclaim that we are in boom times. This would be foolish. The market is in a healthy state, as it has been for the whole of 2016, but one look at the Cromford® Market Index tells us that there is no breakout going on in the fourth quarter. We need to remember that 4Q 2015 makes for very easy comparisons thanks to the introduction of TRID at this time last year.

There are a few signs of a cooling trend in parts of the West Valley and a warming trend in parts of the Southeast Valley. Some western and central ZIP codes have seen jumps in active listings while some southeastern ZIP codes are unusually under-supplied. Compared with a year ago, we see big jumps of over 50% in supply in 85006, 85008, 85031, 85033, 85307, 85363 and 85378. Falls of over 20% can be found in 85007, 85012, 85023, 85045, 85048, 85054, 85085, 85213, 85225, 85249, 85295 and 85390. The supply situation in Ahwatukee, Chandler and Tempe has become noticeably more difficult for buyers recently.

Overall the market is looking healthy with no significant signs of dysfunction. Provided that lenders continue to slowly improve availability of loans, modest increases in interest rates should not disrupt the market. However the possibility of a sudden, unexpected and large rise in mortgage rates could take the wind out of certain buyers' sails.

November 2 - Market Summary for the Beginning of November

Market Summary for the Beginning of November

Let us start with the basic ARMLS numbers for November 1, 2016 relative to November 1, 2015 for all areas & types:

  • Active Listings (excluding UCB): 21,028 versus 21,439 last year - down 1.9% - but up 4.3% from 20,153 last month
  • Active Listings (including UCB): 24,862 versus 24,644 last year - up 0.9% - and up 3.2% compared with 24,101 last month
  • Pending Listings: 6,050 versus 5,821 last year - up 3.9% - but down 0.2% from 6,065 last month
  • Under Contract Listings (including Pending, CCBS & UCB): 9,884 versus 9,026 last year - up 9.5% - but down 1.3% from 10,013 last month
  • Monthly Sales: 7,106 versus 6,328 last year - up 12.3% - but down 4.5% from 7,437 last month
  • Monthly Average Sales Price per Sq. Ft.: $144.38 versus $134.29 last year - up 7.5% - and up 1.9% from $141.71 last month
  • Monthly Median Sales Price: $229,000 versus $211,000 last year - up 8.5% - but down 0.4% from $230,000 last month

The sales count for October was very impressive, all the more so since there were only 20 working days this October and 22 in 2015. To be up 12.3% with 2 fewer days represents very strong sales growth year over year.

Pricing too was positive, with the average price per square foot (our preferred measure) up 7.5% for the year and jumping almost 2% from the month before. There was little movement in the median sales price month to month however.

We can see that once again the tendency for agents to use UCB instead of pending status has distorted the demand picture, with listings under contract up 9.5% but pending listings up only 3.9%. Both are higher than last year, another positive omen.

For sellers there is very little to grumble about in these numbers. Supply did move higher by 4.3% (excluding UCB), but it moves higher every year, and in 2016 the trend was weaker than last year. Even the luxury market, although still not running on all cylinders, is looking quite a bit better than a few months ago. There were 12 single family sales over $3 million compared with only 5 in October 2015, which is an increase of 140%. Sales between $2 million and $3 million were up 80% from 5 to 9.

Sales counts were down below $175,000 and dramatically lower in all price ranges under $150,000 Supply is very limited in these bottom price ranges, but demand seems to be cooling for what is left unsold.

Volume in the mid-priced ranges is up substantially from last year, with closings more than 30% higher for all ranges from $175,000 to $350,000. Unit volume between $800,000 and $2 million was also up more than 30%.

So no evidence of any slow down because of the impending election....

October 15 - Mid Month Pricing Update and Forecast

Mid Month Pricing Update and Forecast

 

Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.

For the monthly period ending October 15, we are currently recording a sales $/SF of $142.45 averaged for all areas and types across the ARMLS database. This is up 2.2% from the $139.37 we now measure for September 15. Our forecast range midpoint was $140.36, with a 90% confidence range of $138.27 to $143.91, so this month the actual pricing came in stronger than the mid-point but lower than the 90% confidence upper bound.

On October 15 the pending listings for all areas & types shows an average list $/SF of $147.60, up 0.7% from the reading for September 15. Among those pending listings we have 92.1% normal, 2.7% in REOs and 5.2% in short sales and pre-foreclosures. This mix slightly favors short sales and pre-foreclosures compared to last month.

Our mid-point forecast for the average monthly sales $/SF on November 15 is $142.97, which is 0.7% above the October 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $140.11 to $145.83.

After the usual summer lull, pricing has regained upward momentum and it seems probable that will see the highest average price per square foot for 2016 posted during December.

Market Summary for the Beginning of October

Let us start with the basic ARMLS numbers for October 1, 2016 relative to October 1, 2015 for all areas & types:

  • Active Listings (excluding UCB): 20,153 versus 20,024 last year - up 0.6% - and up 5.0% from 19,186 last month
  • Active Listings (including UCB): 24,101 versus 23,238 last year - up 3.7% - and up 4.0% compared with 23,173 last month
  • Pending Listings: 6,065 versus 5,789 last year - up 4.8% - but down 4.2% from 6,331 last month
  • Under Contract Listings (including Pending, CCBS & UCB): 10,013 versus 9,003 last year - up 11.2% - but down 3.0% from 10,318 last month
  • Monthly Sales: 7,390 versus 7,003 last year - up 5.5% - but down 7.1% from 7,952 last month
  • Monthly Average Sales Price per Sq. Ft.: $141.92 versus $133.44 last year - up 6.4% - and up 2.2% from $138.81 last month
  • Monthly Median Sales Price: $230,000 versus $213,000 last year - up 8.0% - and up 1.0% from $227,800 last month

We can be happy that we at last have an apples to apples comparison with 21 working days in both September 2016 and September 2015. Sales are up 5.5% over last year and this is a small but distinct improvement over the 4.6% for July and August combined. Pending listings are also up by 4.8% while under contract listings are up 11.2% thanks to the increasing use of UCB and CCBS status. So demand has been exhibiting a mildly positive trend. This is reflected in the Cromford® Demand Index which stands at 106.7 on October 1, the highest reading since May 2013.

For supply the picture is very dependent on price range. Supply is simply awful between $100,000 and $150,000 and much worse than this time last year. As we move up the price ranges, supply starts to become more available and by the time we reach $500,000 it has become more than adequate.

This is the time of year when supply becomes more freely available and we need to watch carefully how the supply builds for the different price ranges. See the daily observation for October 2 for more details on this.

Pricing has escaped from the third quarter lull and enters the fourth quarter in stronger shape. A 2.2% jump in monthly average $/SF is nothing to sneeze at and sets us up for a possible run to $143 to $145 by the end of the year.

We are not seeing any dramatic changes at the moment and the Cromford® Market Index is flat lining around 151. Because of the increasing trend for supply at the moment it would not surprise us if it drifts sideways to slightly lower during the fourth quarter. However, any slight changes like this are are of little significance. Overall the market is firmly in the seller's control except for the luxury market and above $1 million location and date built (or remodeled) become the key issues.

A strong trend is emerging which favors new homes over re-sales. To a lesser extend, smaller attached homes are growing market share at the expensive of larger detached homes. Convenience and style are gradually becoming more important than living space and privacy. This reflects the gain in influence of millennials and the slowly declining importance of baby boomers. The latter are impacting the market by downsizing and retirement lifestyle decisions.

We have a healthy market with low distress levels and gradual improvement in access to financing. Unless there is a sudden reduction in demand, perhaps due to big changes in population growth rates, 2017 is likely to continue to reflect these trends.

Information Deemed Reliable But Not Guaranteed. All information should be verified by the recipient and none is guaranteed as accurate by ARMLS. ARMLS Logo indicates that a property listed by a real estate brokerage other than Re/Max infinity. Copyright 2017 Arizona Regional Multiple Listing Service, Inc. All rights reserved.

Listing information last updated on August 21st, 2017 at 6:48pm MST.