By Peter Clute and Fred Kendrick
The DC Big Picture
Despite growing concerns in the mortgage markets, the overall residential market managed to have a solid sales month in July. New contracts on condominiums and cooperatives reached a record high, but single-family sales slipped further than expected. Combined sales of homes and units were even with July of last year, but trailed in six of the last seven years.
Combined year-to-date sales are now 1% ahead of 2006 due to strong numbers on the condo/co-op side. That market has started to recover after bottoming out last year, but there is more concern on the single-family side where sales through seven months of 2007 are at a nine-year low.
There were 21% fewer new listings this July compared to last year. The total number of available homes and units fell 2% from June and is 7% below the same in 2006. These are all good signs for the market, but we will look for inventories to come down even further in the month of August to be better positioned for the fall market.
To the surprise of many, average and median prices continue to move upward. In this area the larger price increases are for single-family homes, despite the larger sales gains for condos and co-ops. It could be argued that for home sales to pull out of their current slide they need to see the same drop in prices that condos and co-ops saw late in 2006 and early 2007.
New contracts for single-family homes slowed in July, falling 6% from June and 5% from July of a year ago. Sales have grown, albeit unevenly, since spring and early summer, but July saw a return to the February level. These losses in July were felt in most price ranges. Seven months into 2007, new contracts are running 10% behind the pace of 2006, 27% behind 2005 and 33% behind the high point of the market reached in 2004. So far this year the 13% of DC homes priced from $700,000 to $1 million have registered a gain of 37%. All other price ranges, however, are lower than a year ago with the net figure for the year-to-date showing a loss of 10% from 2006.
The inventory of single family homes rose slightly, by 2%, from June to July. Compared to this point last year, the inventory is 2% higher as well. Even though we usually expect to see falling inventories, last year also saw a similar pattern where the number of homes rose in July before falling in the month of August.
There is currently a 4.6 month supply of houses for sale which is the highest number so far this year; but in perspective, this is just about half of the current eight month national average.
Both the average and median sales price of homes have edged up to 7% above the figures at the beginning of the year. Past experience suggests that this appreciation, which is about the same as at this point a year ago, will moderate over the remaining months of the year. At the end of 2006, average prices were up 3% from the beginning of that year after being ahead 7% at this same time a year ago.
Condominiums and Cooperatives
New contracts on condominiums and cooperatives reached the highest level in this report’s eighteen year history for the month of July. Numbers were up 5% from July of 2006, but had seasonal decline of 6% from June of 2007. Units priced between $400,000 and $500,000 (16% of July sales) led the way for the month with a 28% gain from last year.
Year-to-date sales are 13% ahead of the same point last year, but 3% behind 2005’s record pace for condos and co-ops. All price ranges are up over last year, with the largest gains seen in the higher price ranges. Sales of units over $900,000 were up by 37% from 2006 and 13 out of 16 price ranges registered double-digit gains.
The number of units listed for sale in MRIS fell 6% from June and is 16% below the same point last year. New listings in July were down 21% from last year, another good sign leading up to the fall market.
The effective inventory of available units at the end of July stands at 3.68 months, down slightly from the 3.71 months registered at the end of June and down substantially from the 4.61 months posted in July of 2006. The condo/co-op market has been very consistent this year with all but one month in the three to four months of inventory range (March was 2.79).
The average condominium/cooperative price is up 2% from year-end 2006 while the median price is up 1%. Year-to-date settlements are up 15% from last year, but settlements over $600,000 are up 31%. The increase in upper-end settlements is just one of the factors that have kept average and median prices in the black so far this year when compared to 2006.