May home sales in the Wiregrass region decline from one year ago
Sales: According to the Wiregrass Board of Realtors, May residential sales decreased 18.8% year-over-year from 128 to 104 closed transactions. Following seasonal trends, sales increased 7.2% from April. Sales are now up 9.7% year-to-date, but are likely to moderate in the months ahead due to the growing economic impact of COVID-19. Two more resources to review: Quarterly Report and Annual Report.
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Inventory: Total homes listed for sale in May declined 36.6% year-over-year from 549 to 348 listings. Months of supply declined from 4.3 to 3.3, reflecting a marked where sellers generally have elevated bargaining power.
Pricing: The area’s median sales price in May was $150,500, an increase of 3.1% from one year ago and a decrease of 11.2% from April. The differing sample size (number of residential sales of comparative months) can contribute to statistical volatility, including pricing. ACRE recommends consulting with a local real estate professional to discuss pricing, as it will vary from neighborhood to neighborhood.
Homes sold in May averaged 81 days on the market (DOM), 24 days faster than May 2019.
Forecast: May sales were 11 units or 9.6% below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 115 residential sales for the month, while actual sales were 104 units. ACRE forecast a total of 467 residential sales in the area year-to-date, while there were 510 actual sales through May, a difference of 9.2%.
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NAR commentary: According to the National Association of Realtors (NAR), existing home sales nationwide fell 9.7% during May (seasonally adjusted annual rate). This marks a three-month decline in sales activity due to the pandemic. Sales prices, however, remained somewhat stable as the nationwide median sales price increased 2.3% Y/Y, extending the streak of year-over-year price gains to 99 consecutive months.
When addressing slowing home sales, Lawrence Yun, NAR chief economist said: “Sales completed in May reflect contract signings in May and May – during the strictest times of the pandemic lockdown and hence the cyclical low point. Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year.”
Yun added that ““New home construction needs to robustly ramp up in order to meet rising housing demand, otherwise, home prices will rise too fast and hinder first-time buyers, even at a time of record-low mortgage rates.”
ACRE commentary: Closed sales data from May shows that total residential sales declined 15% year-over-year. Sales prices, however, increased 7.1% Y/Y in May. Inventory (properties listed for sale) was tight before the pandemic, and inventory continues to be constrained as listings declined 22% from one year ago. In the months ahead, sales activity is likely to slow when compared to the prior year (Y/Y decline in sales) due to the growing economic impact of the pandemic. While sales prices were somewhat stable through May, they could decline slightly later in the year if demand continues to soften. Pricing dynamics driven by the law of supply and demand are always at work moving toward or away from market equilibrium (6 months of supply) - where buyer and seller have equal bargaining power. In May months of supply was at 3.1.
The Wiregrass Residential Monthly Report is developed in conjunction with the Wiregrass Board of Realtors to better serve area consumers.
Editor's Note: All information in this article reflects data provided to the Alabama Center for Real Estate for the time period May 1 - 31, 2020. Thus, the performance represented is historical and should not be used as an indicator of future results, particularly considering the upcoming impact of COVID-19 on the housing market.