I am sharing the Cromford Report with you this issue. I will say that I personally saw a nice uptick in activity that I wasn’t expecting in this “season”. The lower rates, I believe, is what got some people off the fence.
Mid Month Pricing Update and Forecast Cromford Report
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 month.
For the monthly period ending August 15, we are currently recording a sales $/SF of $281.34 averaged for all areas and types across the ARMLS database. This is down a massive 4.2% from the $293.64 we now measure for July 15. Our forecast range mid-point was $287.29. We correctly forecast a decline, but the size was almost twice what we anticipated – 4.2% rather than the 2.2% we calculated. The actual result was so severe that it fell below our 90% confidence interval. For the third month in a row, the market dropped further than expected. Sellers seem to have far less confidence than they should have considering the actual state of the market. Price cuts are coming fast and concessions are at a high level.
Sellers have experienced seller’s market conditions for so long that a balanced market feels strange and terrifying. Parts of the market are in a buyer;’s market, including Buckeye, Maricopa, Queen Creek, Surprise and Goodyear. But we are not in a buyer’s market overall and conditions have improved since mortgage interest rates started to fall in the last several weeks.
On August 15, the pending listings for all areas & types show an average list $/SF of $328.37, up 1.4% from the reading for July 15. This suggests that prices will start to recover between now and September, Among those pending listings we have 99.2% normal, 0.2% in REOs and 0.7% in pre-foreclosures and short sales. The level of foreclosure activity remains very low, so it is not distress that is causing the sales pricing to weaken.
Our mid-point forecast for the average monthly sales $/SF on September 15 is $288.56, which is up 3.2% from the August 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $282.79 to $294.39.
The last 3 months have been abnormally weak for sales prices, following an unusually strong April. We believe the weakness has probably now run its course and prices are likely to rebound. If this does not happen over the next month then we expect this to happen by mid-October. The high-end of the market has been extremely quiet during the hottest months, but this will probably contribute a larger share of sales to the sale price averages going forward.
