Prepared by Peter Clute and Fred Kendrick Coldwell Banker Residential Brokerage
Combined new contracts on single-family homes, condominiums and cooperatives were up 7% from January, but were off by 18% from February of last year. Led by a solid condo/co-op sales month, this was the fourth best combined sales month on record – behind 2000, 2004, and 2005, but ahead of other Februarys back to 1990.
For the year-to-date, January and February combined totals are 15% behind year’s pace and 10% behind 2004. On the condo/co-op side only the lower prices registered gains from 2005, while the upper brackets fared better on the single-family side. The most active sales months are March, April and May, however, and these upcoming months will give a truer picture of the 2006 sales year.
The inventory of available homes and units increased 9% from January and is 134% higher than the same point last year. This increase was slightly smaller than expected and an indication that we will not have the sharp jump in inventory in the spring market that we saw after Labor Day in 2005.
The slow down in single-family sales, which began by mid-year of 2005, has continued into the first two months of 2006. New contracts in February were 20% lower than in the February’s of 2004 and 2005 and, with exception of 2003, were lower than any February going back to 1997.
The same is basically true for the first two months of this year. Sales are 17% below the same point in 2004, 20% below 2005, and trail the first two months of every year going back to 1997 when the recent strong sales growth, which peaked in 2004, began. Only homes priced from $700,000 to $800,000 and from $1,000,000 to $1,250,000 have shown any real growth during this period.
The current effective inventory (active listings divided by the number of new contracts) of 2.88 months is slightly below the level reached at the end of January but is more than double the 1.33 months of a year ago. There is a healthy inventory of homes for sale in all price ranges over $200,000 so this is clearly not the cause of the slow down in housing sales.
The more likely reasons include rising interest rates for the more affordable adjustable rate mortgages, some tightening by lenders, particularly for interestonly loans, a decline in consumer confidence and the fact that so many people bought houses during the last seven year period that there is no longer the same level of demand.
CONDOMINIUMS AND COOPERATIVES
The number of new contracts on condominiums and cooperatives rose 13% from January to reach the highest level in four months. This was the second best February on record, 10% behind 2005 but ahead of previous Februarys by margins ranging from 9% in 2004 up to 319% in 1995.
Sales in most price ranges were down compared to February of last year. Only the $150,000 to $199,999 range and the $200,000 to $299,999 range showed increases (of 36% and 20% respectively) over 2005. Through two months of 2006, contracts on condos and co-ops are 11% behind last year’s pace, but ahead of previous two-month totals. The lower price ranges are faring reasonably well, with units from $150,000 to $399,999 running 5% ahead of last year. However, sales units over $500,000 (which finished 2005 with an 81% gain for the year) are down 24% from last year.
The inventory of available units rose 13% from January to the highest point since mid-1997 and is now 174% ahead of the same point last year. There were 47% more new listings in February this year compared to last year. The effective inventory at the end of February held steady from January and stands at 3.68 months, compared to 1.21 months a year ago.