It is time to dive into the market statistics for the Huntsville Market from June. We do this every month where we taka look back and see what has been happening in the market ad what that means for buyers and sellers.
I will start with the bottom line up front. We are in a supply constrained seller’s market. New Listings are up from last year, but the demand has not been met so prices are continuing to increase, days on market are low, and supply is very low.
Now let’s dive into the details!
First we will look at the statistics that show us how the supply of homes are trending. Supply is more straightforwad to look at as it pretty easy to measure how many homes are available.
First is the chart from the umber of homes for sale. Every month the MLS records the number of homes on the market. I am not actually sure when the line is snapped so I have to assume they are consistent each month. in June the number was 931 homes, which is a decreas of 15.4% compared to May and a decrease of 30.1% compared to last june.
Next we look at the rate of new listings. This is how many homes were put on the market during each month. There were 881 new listings this is an increase by 3% since May and an increase of 1.5% since last June. As you can see in the chart this would have been the most listings of any month last year and among the most listings of any month over the past 3 years. With all of the shutdowns it will be interesting to see what seasonal trends continue or if there is a change in the timing. The general consensus among economists seem to think that there will be a delay in sales rather then a decrease in home sales for the year. The increase in June supports this and we will have to watch to see what happens in July – September to see if we see the normal seasonal decrease or if the listing rate is increased during the fall.
This is a daily chart that I make based on the MLS data. It is interesting that the daily rate was pretty consistant throughout the month. With fairly small changes in the moving averages and not real significant spikes in listings outside of the normal weekly rythyms.
Demand is a little more challenging to measure as it is hard to quantify how many buyers are looking for homes. All we can look at are lag indicators in the number of homes that were closed or put under contract. Which is useful, but not perfect at telling where the market is heading.
We start by looking at the monthly closed sales. In June we are up to 789 homes which is up 14.6% from May and up 6.4% from last year. This is a lag indicator as these homes went under contract 30-60 days ago, but nonetheless this is a big uptick in closed listings and is the highest number since last July.
Looking at the average days on market gives us an idea of demand as well as when it decreases it indicates a larger pent updemand. The closed homes in June were on the market an averag of 26 days, which is down from 27 in May and 35 last June.
The average in this case is pretty sensitive to a single large data point so it is valuable to look at the median as well. in June the median days on market across the county was 4 days. Which is down from 6 days in May and 11 last year. This is pretty crazy that half of the homes that closed last month were on the market for 4 days or less. The difference in the median and the average tells us that a couple of individual outliers are pulling the average up. This metric points to a significant amount of pent up demand in the market. This is likely due to increased activity after the COVID stay at home orders loosened up.
Pending sales is aother good metric for looking at demand. It tells us how many homes went under contract in a month. The weakness of this metric is that not everything that goes under contract actually closes so the number will be a little higher, but despite the weakness its useful. in June we had 920 homes go under contract. Which means we had 39 more homes go under contract then we had new listings. That is pretty high! It is the most under contract since Jan 2017, it is 14% more than in May and 16.2% more than last June. This definitely indicates a very strong demand. Also we can see in the trendline that it has been a very sharp increase in pendings the last two months. most years it increases in the spring and stays pretty flat during the summer. I think the spike happened a little later but it will be interesting to see if it stays up that high for a couple of months or if this is a one month spike.
Looking at the daily break down of pending sales there was an increase near the end of the month. I do not have theory as to why, but we will have to watch it next month to see if that is a blip in the radar or the beginning of a trend.
We cannot talk about demand right now without mentioning mortgage rates. A big driver of buyer interest right now is that we have the lowest average mortgage rates in history. There has never been a better time to get a mortgage so buyers are interested in finding a home and getting that rate locked in. The chart is showing the weekly rates since the recession. As you can see we are now below the previous low in mid-2013. Most experts thought we would never see those numbers again.
This is a chart I make where I show the daily difference in new listings and pending sales. The balance and the trendline should give us a good idea which way the market is moving. At the end of June we were averaging more homes going under contract then being listed for both the 7 and 14 day average.
Finally all of this should get us to look at the price. I prefer to follow the median price trend. It is less sensitive to shifts by a single property so tends to be a little less noise than the average. The trendline is definitely showing an appreciating market. The median price is up to $248,000 which is a 3% increase since last month and a 10.4% increase since last year.
So “What does this mean?” the metrics all point to an increasingly strong seller’s market. The listings being up are good for the market as we definitely have unmet demand. The pending sale count increase and decrease in Days on Market point to additional unmet demand still existing. This has led to the median price continuing to increase. For buyers, this means that you have to be aggressive both in searching for a home and in the offers you make. It is very helpful if you have some cash on hand so that you can make stronger offers with larger down payments. We want to get every advantage we can so we need to remove as many conditions on the offer as we can to make it as attractive as possible. For sellers, this is a great time to list. We can push the price on your home as there is ample demand to justify a price over the comparable sold properties. Now we cannot get too greedy as there are still examples of homes that go to market overpriced that just sit on the market even with all this demand. You do not want to be in that position.