April 2019 Home Sales Report

Weak April Inventories Reduce Home Sales and Push Prices Up

Date: May 20, 2019

MADISON, Wis. — For the second straight month, Wisconsin's sales of existing homes failed to keep pace with last year's sales, which put significant pressure on home prices, according to the most recent analysis of the state housing market by the Wisconsin REALTORS® Association. Home sales in April were 9.7 percent below the levels of 12 months earlier, while median prices rose 8.3 percent to $195,000 over that same period. On a year-to-date basis, sales lagged behind the first four months of 2018 by 7.8 percent, which pushed prices up 6.4 percent to $184,000. The primary reason for the lower sales and higher prices is the continued weakness in home inventories, which fell again in April.

"We've been in a seller's market for nearly two years, and if we continue to see limited homes for sale, we'll have a hard time matching the 2018 sales levels this year," said WRA Chairman Jean Stefaniak. Six months of supply signals a balanced housing market, and the statewide supply has been under that benchmark since June 2017. The state currently has 4.3 months of supply, which is down from the 4.6 months seen in April of last year. 

"Tight supply is an ongoing problem for nearly every region of the state," said Stefaniak. The only exception was the North region, which had 7.4 months of supply in April, down from 8.2 months a year earlier. Interestingly, that region saw the smallest reduction in sales of all regions in the state for the month of April. The Central region had five months of supply, and all other regions had supply at 4.3 months or lower. Stefaniak pointed out that the North region is primarily rural with a significant second-home market. "Rural areas have far more inventory than counties with larger towns and cities," said Stefaniak, who noted that counties in metropolitan areas of the state had about half the inventory of rural counties. "If there is any good news on the inventory front this month, it's that the new listings were up in April," she said. The number of new listings in April were up 7 percent compared to April of last year. Still, the total listings in the state are down compared to where they were 12 months ago. 

"With a strong economy, there is a lot of demand pressure, which continues to push prices up well above the rate of inflation," said WRA President & CEO Michael Theo. The median price increased 8.3 percent over the past year, which is approximately four times the rate of inflation. According to the latest estimate from the U.S. Bureau of Labor Statistics, the overall annual inflation rate was 2 percent in April; and core inflation, which excludes the more volatile food and energy sectors, came in at 2.1 percent. "Statewide home prices began rising in spring 2012, and they have generally exceeded the rate of inflation for nearly that entire time," said Theo. He noted that the annual rate of price appreciation has been 6 percent or higher for eight of the last 12 months.  

"Our housing is definitely getting less affordable, and eventually this will slow demand," said Theo. The Wisconsin Affordability Index shows that fraction of the median-priced home that a household with median family income can afford to purchase, assuming 20 percent down, and a 30-year fixed-rate mortgage on the remaining 80 percent of the balance. The index has fallen from 203 last April to 195 in April 2019, which is a decline in affordability of 3.9 percent over the last year. "We would have seen an even greater erosion of affordability were it not for the slight reduction in mortgage rates and modest increase in estimated family income levels since April 2018," he said. "There are still good opportunities for buyers, but working with an experienced REALTOR® and being prepared to move quickly is the key to success in this tight market," said Theo.

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