Prepared by Peter Clute and Fred Kendrick Coldwell Banker Residential Brokerage
In response to growing concerns about interest rates and the economy, November sales declined across the board and in almost every price range for both single-family homes and condominium/cooperative units. Total new contracts were down 15% from October and more significantly were down 18% from November of 2004 and 13% from 2003; although they are still well ahead of all Novembers before 2002.
Eleven months into 2005, overall residential sales now trail last year’s record-setting pace by 2%. For comparison purposes, at the end of October they were even with 2004 and in June they were 3% ahead. Overall sales are still ahead of all prior years, which probably means that 2005 will record the second best sales year going back to this Report’s inception in 1990. The slowdown in sales is certainly not the result of any shortage of inventory. Both single family and condos/co-ops experienced double-digit gains in November and are 82% ahead of this time a year ago. These inventory gains were even greater for homes and units priced over $300,000.
Average sales prices for single family homes and condos/co-ops have increased by less than 1% since the end of the third quarter in September and are 2% ahead of the second quarter in June. For the year they are nearly 20% ahead, which will result in new price records for Washington. This slowing pattern after mid-year is consistent with what we have seen in most prior years and is indicative of where we will be at year’s end.
Sales contracts for all single-family homes in November fell 9% from October and 18% from November 2004. For the year this month’s sales were the lowest since January 2005.
Sales were down in all price ranges except $300,000 to $450,000, which showed a small gain of 2%, and homes from $750,000 to $1 million, which continued their strong yearly performance with a gain of 26%. The biggest declines, as they have been all year, were for homes priced under $300,000 where an ever-diminishing inventory led to a 50% loss in sales from last November. But even homes priced over $300,000, which have shown double-digit gains for the first seven months of the year, declined by 2%.
For the year-to-date, overall sales are off 9.5% from a year ago but homes over $300,000 still show a 16% gain. The strongest performers are the homes from $750,000 to $1 million which are ahead 45% for the year, followed by homes over $1 million, up nearly 20%, and homes $450,000 to $600,000, up 14% from a year ago.
There is plenty of inventory over $300,000 to fuel a strong upswing in sales once sellers and buyers adjust to the changing market conditions. New listings in November were up 29% from last November and for the year are ahead by 71%. For sellers this means pricing realistically and for buyers an awareness that even with more product for sale this is still a strong housing market.
Reflecting the increase in new listings and a slow sales month in November, the effective inventory for all single-family homes is now three months, the first time it has reached this level since the 1990s. This effective inventory grows to 6.4 months for homes over $1 million.
For the year, average sales prices are 21% ahead of 2004 with all but 2% of this gain coming in the first six months of the year. This compares with a 17% gain in 2004 over 2003. Clearly this will be a record year for housing prices.
CONDOMINIUMS AND COOPERATIVES
New contracts on condominiums and cooperatives in November fell 21% from September and posted the lowest monthly sales total of the year. In two of the last three years sales fell 10% from October to November, so this decline is not completely unexpected. Compared to last year, new contracts were down 17%. A small portion of the market, the $700,000 to $1,000,000 price range (7% of November sales) registered a substantial gain of 75% from last year, but all other price ranges saw losses for the month.
Despite the slow November, year-to-date sales are still 8% ahead of 2004. In fact, 2005 has already surpassed 2004s sales totals, making this the most successful sales year for condos and co-ops in the 15-plus year history of this market report. For the year, sales of units over $500,000 are ahead of last year’s pace by 88% while the largest section of the market, the $300,000 to $400,000 range (26% of 2005 yearto- date sales), is 14% ahead of last year.
The inventory of available units fell 2% from October to November, but is still 114% higher than the same point last year. This is only a small reduction in inventory, but after increases of 24% and 76% in the two previous months, a 2% decline is welcome news for the market. The effective inventory at the end of November stands at 3.82 months, up from 3.07 months at the end of October and the highest number since August 1998.
The average and median prices of condos and co-ops both registered small increases of 1% from October and are now 17% and 16% ahead of year-end 2004 respectively.