November sales kept pace with prior year despite inventory crunch
The Wisconsin Realtors Association’s latest market analysis shows that the shortage of single-family homes for sale in Wisconsin continued to put upward pressure on prices in November.
But the number of homes sold was nearly identical with solid sales in November 2017.
The monthly report showed November home sales up 0.5 percent from that same month last year, and median prices increased 7.7 percent to $183,000 across the state. On a year-to-date basis, home sales remained 1.7 percent below the first 11 months of the previous year, whereas the median price was 6.7 percent above the same 11-month period in 2017.
“Unless we have a phenomenal December for home sales, it looks like we will come up a little short of last year’s sales totals,” WRA Board Chairman Jean Stefaniak said in a news release.
A typical December accounts for about 6.8 percent of annual sales, so December home sales would need to grow by nearly 24 percent compared to 2017 to close the gap that exists through the first 11 months of 2018.
Four of the five counties in the Southern Lakes region saw nice sales increases in November compared to the same month in 2017.
Walworth County sales were a whopping 23.7 percent higher, while Racine County saw a 19.4 percent increase. Jefferson County’s numbers were up 9.8 percent and Waukesha County enjoyed a 3.8 percent hike.
Kenosha County suffered the only decrease, dropping 7.1 percent.
The median price remained even or improved from November 2017 to November 2018 in all five counties.
Racine’s stayed at $165,000 and Waukesha’s moved up a hair at 0.3 percent.
Meanwhile, Walworth County’s led the way with a 15.5 percent rise to $220,000, Jefferson’s went up 8.0 percent to $210,000 and Kenosha’s was up to $173,700, a 5.9 percent bump.
Kenosha County was the only one to show a year-to-date sales increase through the first 11 months of 2018 compared to 2017 at 2.1 percent.
Through November, Jefferson sales were down 18.6 percent compared to 2017, while Walworth’s decreased by 4.8 percent, Waukesha’s by 2.3 percent and Racine’s by 2.0 percent.
However, YTD median prices continued to climb.
Jefferson’s price shot up 17.1 percent, Racine’s was up 9.3 percent, Walworth’s rose 8.2 percent, Kenosha’s improved 6.0 percent and Waukesha’s increased by 5.0 percent.
“This has been an impressive year for sales given the scarcity of homes on the market,” Stefaniak said.
There were just four months of inventory available in November, which is below the 4.5 months available this time last year.
“Inventory has been a problem in most regions around the state and in most price ranges over the last year,” she said.
All regions saw inventories tighten over the last 12 months, and only the North region could be characterized as a buyers’ market, with 7.3 months of available supply. All other regions were well below the six-month benchmark that represents a balanced market.
Over the last 12 months, homes priced below $500,000 experienced a seller’s market, particularly homes in the $125,000 to $199,999 range, which were very scarce with just 3.1 months of supply. For homes priced above $500,000, there was ample supply with 9.8 months of inventory.
Stefaniak noted the good news that new listings were up 5.2 percent in November.
“Inventory levels adjust gradually, but at least we are seeing a few more homes finding their way into this tight market,” she said.
“We’ve had a strong economy in the state, which has pushed incomes up, but affordability still has suffered given the price and mortgage rate increases this past year,” WRA President & CEO Michael Theo said in the news release.
The WRA estimates the statewide growth in the median family income was 3.4 percent over the last 12 months, but the nearly 1 percent increase in the 30-year fixed rate mortgage combined with the 7.7 percent increase in the median sale price dropped affordability 13.3 percent.
The WRA Housing Affordability Index shows that portion of the median priced home that a borrower can afford to buy, assuming they have median family income, a 20 percent down payment and 30-year fixed mortgage on the remaining balance. The index fell from 225 in November 2017 to 195 this past month.
Theo noted that economic fundamentals remain solid. The national unemployment rate has remained steady at 3.7 percent the last three months, and the statewide rate has held at 3 percent since August with 31,800 total private sector jobs created over the 12 months ending in October.
He pointed out that home prices do tend to soften during the winter months as demand moderates.
