Date: September 22, 2014
MADISON, Wis. — Home sales fell for the second straight month in August whereas median prices rose by modest margins. Wisconsin’s existing home sales dropped 5.7 percent in August compared to August 2013, and median home prices were up 3.3 percent to $157,000 over that same period, according to the most recent housing market report released by the Wisconsin REALTORS® Association (WRA).
“Home sales continue to lag behind 2013, and while it’s important to remember that 2013 was a strong year for sales, there are a number of other contributing factors that also explain relatively lower sales,” said Steve Lane, chairman of the WRA board of directors. He noted that some of the weakness is related to problems with available inventories: “Inventories are tighter in our metropolitan areas compared to rural areas, and some buyers may be having difficulty finding homes to buy in those markets,” said Lane. Metropolitan counties had 7.7 months of available inventory in August, and their sales were down 8.1 percent compared to August last year. In contrast, rural counties have 16.6 months of inventory, and their sales were essentially flat, falling less than 0.2 percent.
In addition, price appreciation may also be contributing to the weaker sales. Specifically, Wisconsin has seen median prices grow by 9.8 percent since August 2012. This is more than 2.5 times greater than the growth in the general price level over that same period. “Even though Wisconsin housing remains very affordable in the state, some potential buyers may have gotten priced out of the market over the past year,” said Lane. Finally, the uneven pace of economic growth has also contributed to a weaker housing market. GDP growth was negative in the first quarter but did increase by a solid margin in the second quarter of 2014. Uncertainty about the economy combined with only modest job growth in the state may have also contributed to weaker sales in August 2014, compared to August 2013.
The regional picture was mixed with three of the six regions seeing an increase in home sales, including the growth in the West, North and the Northeast, up 7 percent, 1.8 percent, and 1.3 percent, respectively. However, lower sales between August 2013 and August 2014 occurred in in the Southeast, Central and South central regions of the state, down 8.6 percent, 9.9 percent, and 14.4 percent, respectively.
Once again, the monthly median price increase was modest, with prices up 3.3 percent in August compared to the same month last year. “Given that prices were going up so quickly in 2013, it’s encouraging to see these settle down this year,” said Michael Theo, WRA President and CEO. Year-to-date, the median price appreciation is just 2.4 percent, which is only slightly higher than the rate of inflation. Annual inflation has run between 1.1 percent and 2.1 percent throughout 2014. “This has kept our housing more affordable than other parts of the country,” said Theo. The Wisconsin Housing Affordability Index shows the percent of the median-priced home that a household with the median family income and a 20 percent down payment can afford to buy at current mortgage rates. The index was at 211 in August, which is unchanged from the August 2013 level. By comparison, the national index stood at 151.3 in July, and the index value for the Midwest was at 191.7 in that same month. “This shows that Wisconsin housing remains a very good value, and an experienced REALTOR® can help sellers sell more quickly, and buyers find the best fit for their needs,” said Theo.