LV house sales in decline for sixth month in a row
The topsy-turvy Lehigh Valley house sales market continued in July with closed sales and new listings down by double digits and median sales price and average sales price up by double digits. A key factor is the decline in inventory by more than one-third of houses for sale.
And the “B-Word” is being mentioned, as in real estate bubble when the bubble of increasing house prices could burst as it did a decade ago in the Great Recession of 2007-2008, which was attributed in large part to the nationwide collapse of the residential real estate market.
According to the Greater Lehigh Valley Realtors (GLVR) latest report, released Aug. 14, the percentage of closed sales dropped in July for the sixth month in a row, down 16.8 percent to 655, compared to 787 closed sales in July 2017.
The number of closed sales was also down in June. The May to September season is considered to be the height of the house-sales season.
July marks the first time that closed sales for houses dipped below 700 in the past three months.
The percentage drop in closed sales for July was less than the percentage drop in June, which was down 25.2 percent to 719, compared to 961 closed sales in June 2017.
Closed sales in May, at the start of the house sales season, were down 8.5 percent with 765 houses sold, compared to 836 houses sold in May 2017.
For the year-to-date, closed sales for 2018 are down by 9.3 percent, with 4,329 houses sold, compared to 4,773 houses sold year-to-date in 2017.
Ominously for the remainder of the house sales season, pending sales decreased significantly, down by 8 percent in July to 715, compared to 777 in July 2017.
Pending sales for 2018 are also tracking lower, down 8.2 percent to 4,859, compared to 5,294 year-to-date for 2017.
Pending sales had increased slightly, by 2 percent in June to 802, compared to 786 in June 2017.
Inventory levels again shrank in July, by 35.7 percent to 1,601 units, compared to 2,488 units in July 2017.
The July inventory level decline is similar to that of June, when inventory levels were down 37.3 percent to 1,571 units, compared to 2,507 units in June 2017.
The Months Supply of Inventory also dropped, by 33.3 percent in July to 2.4 months, compared to 3.6 months in June 2017.
The Months Supply of Inventory decline is similar to that of June, when Months Supply of Inventory dropped by 37.8 percent in June to 2.3 months, compared to 3.7 months in June 2017.
Days on Market was down 26.2 percent in July to 31 days, compared to 42 days in July 2017.
That’s a much larger decline than in June when Days on Market was down 7.9 percent in June to 35 days, compared to 38 days in June 2017.
New listings were down 13.1 percent in July to 930, compared to 1,070 in July 2017.
That’s slightly better than for June when new listings were down 15.2 percent in June to 995, compared to 1,174 in June 2017.
Real estate experts are trying to ascertain the next shift, if any, in the residential housing market.
“Housing price chatter has increased this summer, as market observers attempt to predict the next residential real estate shift,” said GLVR CEO Justin Porembo.
“It is too early to predict a change from higher prices and lower inventory, but the common markers that caused the last housing cool-down are present,” Porembo said.
Porembo noted that wages are up but not at the same pace as home prices, leading to the kind of affordability concerns that can cause fewer sales at lower prices. At the same time, demand is still outpacing what is available for sale in many markets.
The GLVR July data showed a continued record-breaking run for home prices as housing demand continues to outpace what is available.
The June Median Sales Price was already higher than that of when the housing bubble burst in 2007-2008 during the Great Recession, according to the GLVR.
Even with home prices marching upward, sellers are, on average, receiving 98.5 percent of asking price, the GLVR July report states.
In July, prices continued to increase, by nearly 20 percent, even more so than in July. The Median Sales Price increased 18.5 percent to $225,000, compared to $189,000 in July 2017.
In June, the Median Sales Price increased 12.6 percent to $225,000, compared to $199,000 in June 2017.
The Average Sales Price also increased more in July than in June. The Average Sales Price increased 11.7 percent in July to $248,754, compared to $222,651 in July 2017.
That’s up from June when the Average Sales Price increased 8.8 percent in June to $253,027, compared to $232,579 in June 2017.
Sellers, on average, received 98.5 percent of the asking price in July, a 0.2 percent increase, compared to 98.3 percent in July 2017, according to the GLVR.
That’s about consistent with June, when 98.7 percent of the asking price was received in June, a 0.5 percent increase, compared to 98.2 percent in June 2017.
As a result, the Housing Affordability Index took another hit, down 20.1 percent in July, compared to July 2017.
That’s an increase in the Housing Affordability Index, which was down by 16.4 percent in June, compared to June 2017.
“Consumer spending on home goods and renovations are up, and more people are entering the workforce,” said Sean LaSalle, President of GLVR.
LaSalle sees the Lehigh Valley housing market as more likely to maintain a sense of balance rather than create a bubble that will burst.
“Employed people spending money is good for the housing market. Meanwhile, GDP growth was 4.1 percent in the second quarter, the strongest showing since 2014,” said LaSalle.
“With a growing economy, solid lending practices and the potential for improved inventory from new listing and building activity, market balance is likely,” LaSalle said.
Housing starts are down, according to the GLVR July report. But that is more reflective of low supply than anything else, the report stated.
Closed sales in June were down 25.2 percent with 719 houses sold, compared to 961 houses sold in June 2017.
Closed sales in May were down 8.5 percent with 765 houses sold, compared to 836 houses sold in May 2017.
Closed sales in April were down 10.6 percent with 591 houses sold, compared to 661 houses sold in April 2017.
Closed sales for March were down 7.9 percent to 595 houses sold, compared to 646 houses sold in March 2017.
Closed sales for February were down 6.7 percent to 421 houses sold, compared to 451 houses sold in February 2017.
Closed sales for January were up 2.6 percent to 442 houses sold, compared to 431 houses sold in January 2017.
Carbon County saw a solid July, according to the GLVR July report.
Inventory was down 1.4 percent to 341 units.
Months Supply of Inventory decreased 16.7 percent to 6 months.
The Median Sales Price increased 34.7 percent to $170,100.
Pending Sales climbed to 64, versus 56 the previous July.
There was an increase in New Listings, which hit 107.
The Greater Lehigh Valley Realtors is a not-for-profit trade association representing more than 2,000 Realtors in Carbon, Lehigh and Northampton counties.
GLVR provides professional development and training resources, competitive market information, legislative advocacy, peer review and mediation processes for members, and a dispute resolution service for consumers.
GLVR owns and operates the Greater Lehigh Valley Multiple Listing Service (MLS) and the Greater Lehigh Valley Real Estate Academy.