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Wisconsin Home Sales Moderate But Outperform Nation and
Region
Date: August 15, 2006
For More Information Contact: David E. Clark, Economist
C3 Statistical Solutions Inc.
Office phone: 414-803-6537
Madison -
Rising
interest rates dampened the state housing market in the second
quarter of 2006, although existing home sales in Wisconsin still
outpaced the Midwest region and the nation as a whole, according
to the latest analysis by the Wisconsin REALTORS®
Association (WRA). The REALTORS® said sales of
existing homes in Wisconsin fell 3.8 percent as compared to the
second quarter of 2005 with a total of 29,425 units selling
during the second quarter of this year. The Midwest region was
down 4.7 percent, and the nation saw home sales fall 7 percent
in the second quarter of 2006 as compared to the same period
last year.
“This was
not unexpected given the record pace of home sales that the
state has enjoyed over the past few years,” said WRA Chairman
Jeff Kitchen. “While the Fed continues to raise short-term
interest rates to keep inflation in check, mortgage rates have
also increased and this was bound to eventually diminish our
sales volume,” said Kitchen. “Nonetheless, it is important to
remember that the second quarter of 2005 was a record quarter,
and we remain close to those record levels.” He also noted that
the state economy remains strong, with job growth exceeding
37,000 jobs in the second quarter of this year as compared to
the second quarter last year, and unemployment remains in the
4.7 percent range. “While a moderation of home sales from the
torrid pace established last year isn’t surprising, we expect
the housing market to remain healthy given the strength of the
state economy,” said Kitchen.
Second
Quarter Regional Sales Data
Existing home sales in the second quarter
of 2006 were below the record levels established in that same
quarter last year in five of the six regions in the state. While
the Central region was up 3.2 percent, home sales in the other
regions fell anywhere from 4 percent to 9.2 percent. Modest
declines were seen in the Southeast (-4 percent), South Central
(-4.7 percent) and Northeast (-5.1 percent) regions and more
substantial reductions were seen in the Northern (-7.8 percent)
and Western (-9.2 percent) regions.
For the
second straight quarter, the strongest regional home sales
growth in the state was in the Central region. Specifically,
existing home sales increased 3.2 percent during the second
quarter of 2006 as compared to that quarter in 2005. Wood County
experienced an increase in sales of 19.3 percent, and Portage
County was up 5.3 percent, both on solid sales volume. Also up
were Clark County (6.5 percent) and Waushara County (1.1
percent) on more modest volume. Marathon County, which is the
largest county in the region, fell just 2.2 percent, whereas
Adams County dropped 56.5 percent and Juneau County slid 66.7
percent. Note, however, that collectively these two counties
sold just 15 fewer homes during Q2 2006 as compared to Q2 2005.
Home sales
in the Southeast region were off their Q2 2005 pace by 4 percent
with most counties experiencing a moderate decline in sales
activity. Two exceptions were Washington County, which increased
1.6 percent in the second quarter and Waukesha County, which was
up 0.9 percent. Milwaukee County was down (-2.4 percent),
whereas Ozaukee County fell 5.9 percent, Kenosha County dropped
6.5 percent, and Sheboygan County declined 7.9 percent. Two
counties experienced double-digit reductions in their sales,
with Racine County falling 11.6 percent and Walworth County
dropping 14.7 percent in Q2 2006 as compared to the levels
established in Q2 2005.
The South
Central region fell 4.7 percent below the strong levels
established in the second quarter of 2005. Two of the more rural
counties saw their sales volume rise slightly. Specifically,
Sauk County was up 2.7 percent and Dodge County grew 1.8
percent. However, there were modest declines in Rock County
(-2.9 percent), Columbia County (-3.4 percent) and Dane County
(-4.6 percent). More substantial reductions were seen in Green
County, which fell 9.5 percent, and Jefferson County, which slid
20.2 percent in Q2 2006 as compared to Q2 2005. It should be
noted that Jefferson County, which borders two metropolitan
areas, has experienced very solid growth over the past three
years, and even with a double-digit reduction remains well above
the level of sales it experienced in the second quarter of 2002.
Existing home sales in the Northeast region fell 5.1 percent
in the second quarter of 2006 as compared to that same quarter
in 2005. However, unlike the Southeast and South Central
regions, there was more volatility among the counties in the
region, with some counties recording solid to strong growth over
the period. The strongest sales growth was seen in Marinette
County, where sales were up 27.7 percent on solid volume. In
addition, Calumet County was up 17.2 percent, again on solid
sales volume in Q2 2005. Also up were Manitowoc County, which
grew 6.2 percent; Green Lake County, which was up 5.6 percent;
and Shawano County, which increased moderately (2.8 percent).
Some counties experienced modest declines including Fond du Lac
County (-2.2 percent), Outagamie County (-4.1 percent) and
Oconto County (-6.3 percent). Two of the most populous counties
in the region fell more substantially. Brown County was off its
Q2 2005 pace by 8.1 percent and Winnebago County fell by 8.7
percent. Finally, there were several counties that experienced
double-digit reductions off of the very high level of sales set
in Q2 2005. Specifically, Door County dropped 11.9 percent and
Waupaca County fell 23.1 percent and both of these reductions
were on sales volume exceeding 175 units in Q2 2005. Kewaunee
slid 29.7 percent on more moderate volume, and Menominee dropped
14.3 percent on much smaller sales volume.
Home sales
in the Northern region fell 7.8 percent in the second quarter of
2006 as compared to the levels established in that same quarter
in 2005. This region, which has been very strong in recent years
saw some counties grow substantially, while other counties
dropped significantly off of their pace of last year. The
strongest growth was seen in Forest County, where sales were up
61.1 percent, although this was on modest volume (i.e., 18 sales
in Q2 2005). This was followed by strong sales in three counties
that each had 70 or more sales in the second quarter of 2005.
Specifically, Langlade County was up 31.2 percent, Price County
rose 21.4 percent, and Lincoln County grew 18.6 percent over the
period. Florence County was unchanged from last year, whereas
the remaining counties in the region were down from their Q2
2005 levels. These include Washburn County, which fell 2.2
percent, Barron County, which declined 3.6 percent, Rusk County,
which dropped 4.2 percent, and Vilas County, which fell 8.6
percent. The reductions were more substantial in several
counties with moderate sales volume. These include Burnett
County (-12.9 percent), Ashland and Bayfield Counties that are
combined for reporting purposes (-14.7 percent), Douglas County
(-30.8 percent) and Taylor County (-37 percent). Finally, three
counties that had sales in excess of 100 units in Q2 2005
experienced a relatively significant decline in sales volume
this most recent quarter. These include Oneida County, which
dropped 13.5 percent, Sawyer County, which fell 17.5 percent,
and Polk County, which slid 25.2 percent over the period.
Finally, the Western region of
the state saw its existing home sales fall 9.2 percent in the
second quarter of 2006 as compared to that quarter in 2005. As
was the case in other regions, the performance was mixed, with
two counties experiencing growth in their sales volume and the
remaining counties declining. Among the counties in positive
territory was La Crosse County, which grew at 3.5 percent and
Chippewa County, which was up 2.3 percent. In contrast, Dunn
County fell modestly (-5.8 percent), and four other counties saw
their sales volume drop by more substantial margins.
Specifically, St. Croix County dropped 11.4 percent and Pierce
County fell 13.8 percent over the period. Both of these
counties, which border Minneapolis, have been red-hot in recent
years so these reductions are off of very high 2005 levels. Also
experiencing double-digit reductions in sales volume were Eau
Claire County (-18.7 percent) and Buffalo, Trempealeau and Pepin
counties which are combined for reporting purposes (-32.9
percent). Note that the latter counties only lost 23 sales over
the period.
Second Quarter Median Housing Price Data
Median home prices in the first quarter
rose 2.6 percent statewide to $166,000 according to the REALTORS®’
report. Given the volatility of energy prices over the last
year, this was slightly below the rate of inflation. Across the
state, median prices increased in five of the six regions and
were down only slightly in one region. “The fact that median
prices have increased even as volume fell slightly is an
indication that Wisconsin is not in the midst of a bursting real
estate bubble,” said WRA President William Malkasian. “Although
housing price growth has moderated below the 6 to 8 percent
rates we have seen in recent years, this is not surprising given
that 30 year conventional mortgage rates have increased more
than 1 percent since June of last year,” noted Malkasian, who
added, “We remain confident that housing will continue to be a
solid hedge against inflation.”
Median home prices were up 4.5 percent to
$184,400 in the Southeast region in the second quarter of 2006
as compared to the second quarter of 2005. Within the region,
Ozaukee County prices rose 10.4 percent to $260,700. Nearly as
strong were Walworth County (+7.3 percent to $197,800) and
Racine County (+7 percent to $156,400). Note that both of these
counties experienced double-digit reductions in sales volume,
suggesting that strong price growth may have had a dampening
effect on demand in those areas over the period. More modest
appreciation of median prices was seen in several areas
including Washington County which was up 5.2 percent to
$210,400, Milwaukee County which rose 5 percent to $162,500,
Waukesha County which increased 3.6 percent to $261,800 and
Kenosha County which grew 2 percent to $171,700. The median
price in Sheboygan County was essentially flat with prices down
just 0.1 percent to $129,300.
A very similar pattern emerged in the
South Central region where median prices rose 3.7 percent to
$183,300 over the Q2 2005 to Q2 2006 period. Most counties
within the region experienced growth in their median price, with
the strongest appreciation seen in Jefferson County (+6.3
percent to $171,700) and Columbia County (+6.3 percent to
$161,500). Note that this price appreciation may have
contributed to the double-digit reduction in sales volume seen
in Jefferson County. Price appreciation was nearly as strong in
Sauk County, which grew 6.1 percent to $161,800, as well as
Green County, where their median price rose 5.5 percent to
$143,100. Median prices were up 3.8 percent to $212,000 in Dane
County and they increased 2.3 percent to $130,700 in Rock
County. The only county to experience a slight reduction in its
median price was Dodge County where the price fell 1.5 percent
to $131,000.
The Western region experienced a 2.2
percent increase in median prices for existing home sales to
$153,300 during the second quarter of 2006 as compared to the
second quarter of 2005. Within the region, several counties
experienced solid increases in median prices. These include
Chippewa County where the median price rose 8.7 percent to
$131,700, Pierce County, which saw its median price increase 6.4
percent to $191,600, La Crosse County where the median price
grew 6 percent to $146,200 and St. Croix County, which
experienced a 6 percent median price appreciation to $207,500.
Also up was Dunn County (+4 percent to $148,600). The combined
counties of Buffalo, Trempealeau and Pepin experienced a slight
reduction in the median sales price (-3.1 percent to $104,000),
as did Eau Claire County (-3.3 percent to $127,800).
Median price appreciation in the
Northeast region was up 1.2 percent to $135,400 over the period
Q2 2005 to Q2 2006. Within the region, median prices were up
29.6 percent in Door County to $233,300. Note that median prices
can increase because qualitatively similar homes have increased
in price and/or because the homes selling in the two time
periods have qualitatively changed (e.g., better location,
larger properties, etc.). It is likely that at least some of the
price appreciation seen in Door County over the period results
from qualitative differences in the properties that sold. Also
strong were the counties of Oconto (+10.2 percent to $120,000),
Fond du Lac (+9.4 percent to $127,100) and Shawano (+9.4 percent
to $113,300). Modest increases were seen in Manitowoc County
where median prices rose 3.4 percent to $97,500, as well as the
more urban counties of Brown (+1.1 percent to $153,300) and
Winnebago (+1 percent to $129,300). Median prices in Waupaca
County were unchanged at $114,500, and they were down slightly
in several other counties including Outagamie County (-0.9
percent to $137,300), Calumet County (-1.5 percent to $162,900)
and Kewaunee County (-1.5 percent to $95,000). Modest reductions
in median prices were found in Marinette County (-4 percent to
$80,000), in Green Lake County where median prices fell 4.6
percent to $116,200, and Menominee County, which declined 5
percent to $190,000.
The Central region, which was the only
region to see growth in sales volume over the Q2 2005 to Q2 2006
period, also experienced a 1.2 percent increase in its median
price to $121,400. Within the region, Clark County saw its
median price shoot up 15.4 percent to $78,500. While this is
based on a relatively modest volume of sales, it is interesting
to note that home sales actually increased slightly even as
prices rose, suggesting relatively strong demand conditions in
the county. Median prices were also up modestly in Marathon
County (+4.7 percent to $133,700), they increased 3.2 percent to
$140,000 in Adams County, and they grew 2.5 percent to $96,000
in Wood County. Median prices were essentially unchanged in
Portage County (+0.2 percent to $128,000), whereas they declined
at 5.4 percent to $121,700 in Waushara County.
Finally, median prices fell 2.4 percent
in the Northern region to $124,400 between the second quarter of
2005 and the second quarter of 2006. As has been the case in
recent years, this region saw significant volatility in median
prices. Given that counties in this region include a wide range
of home types including primary homes as well as second homes, a
change in the mix of homes that sold in any given quarter can
dramatically increase or decrease median prices. This is
undoubtedly part of the explanation as to why some counties
experienced very strong median price appreciation, including
Forest County, where the median price rose 109 percent to
$83,600, as well as Rusk County, which saw its median prices
increase 40.9 percent to $112,700, and Taylor County, where
median price appreciation was 36.5 percent to $88,700. Also
strong were Sawyer County (+16.7 percent to $186,700), Vilas
County (+14.6 percent to $137,500), Douglas County (+12.9
percent to $177,300) and Langlade County (+10.3 percent to
$73,600). Note that Sawyer, Vilas and Douglas counties all
experienced modest to substantial reductions in sales volume
over this period suggesting that the increased prices appear to
have put downward pressure on demand. Very modest changes in
median prices were seen in several counties including Barron
County which rose 4 percent to $130,000; Oneida County which was
up just 0.8 percent to $118,000; Polk County which increased 0.8
percent rising to $160,000; and Washburn County, which was down
1.4 percent to $155,600. Finally, several counties saw
double-digit reductions in median prices. These counties include
Price County which fell 11.1 percent to $66,700; the combined
Ashland and Bayfield counties where median prices dropped 13.8
percent to $105,900; Burnett County which saw its median price
fall 15.5 percent to $133,300; and finally Lincoln County, which
on a relatively solid increase in volume had median prices fall
26.8 percent to $87,800. The reduction in median prices for
Lincoln County must be in part due to a change in the mix of
homes selling in the county, although some discounting may have
contributed to the double-digit increase in sales volume over
the period.
The
Wisconsin REALTORS® Association is one of the largest
trade associations in the state, representing over 17,000 real
estate brokers, salespeople and affiliates statewide. Sales
estimates for the state are provided by the National Association
of REALTORS® which seasonally adjusts quarterly sales
figures. All county figures on sales volume and median prices
are compiled by the Wisconsin REALTORS® Association
and are not seasonally adjusted. Median prices are only computed
if the county recorded at least 10 home sales in the quarter.
Finally, several counties in the Western and Northern regions
were re-benchmarked by their data vendors in 2006 and thus Q2
2005 figures were also revised so as to be comparable with the
most recent quarter.
Q2 comparison from 2005 and 2006 Spreadsheet
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