August 2019 Home Sales Report
August home sales slip as prices continue to rise
Date: September 23, 2019
MADISON, Wis. — Wisconsin home sales fell by a modest
margin even as median prices moved up sharply in August, according to the most
recent examination of the existing housing market by the Wisconsin REALTORS®
Association (WRA). Existing home sales fell 2.1 percent in August 2019 compared
to August 2018, while median prices rose 9.0 percent over that same period to
$206,000. On a year-to-date basis, the picture is similar. Comparing the first
eight months of 2019 to the first eight months of 2018, home sales dropped 3.2 while
prices rose 7.6 percent to $199,000.
“Although
we have seen volatile monthly sales over the past years, the summer sales performance
has been very stable since 2015,” said new WRA Board Chairman Steve Beers, who is
the chairman of Keefe Real Estate in Lake Geneva, Wisconsin. Between
June and August, sales ranged between 26,077 homes sold in 2015 and 27,387
homes sold in 2017. This
summer, sales totaled 26,470. “That’s only a 5 percent swing in sales between
the high and the low points, even as the economy has continually strengthened
over that period,”
said Beers. The statewide unemployment rate improved from 4.5 percent in July
2015 to 3 percent in July this year. So why have summer sales not improved more?
Beers points to the tightening supply of homes for sale, noting inventories have
steadily constricted over the last four years, shrinking from 8.5 months of
supply in July 2015 during a strong buyer’s market to just five months of
supply in July 2019 in a solid seller’s market. “The limited supply has
essentially kept our sales in check,” he said.
“With tight
supply and strong demand, robust price appreciation is to be expected, and
that’s exactly what we’re seeing,” said WRA
President & CEO Michael Theo. The median price increased 9 percent between
August last year and this past August, and the statewide median price has now
topped $200,000 for each of the last four months. “We’ve been lucky that
mortgage rates have been falling all year, which has kept our housing relatively
affordable,” said Theo. The 30-year fixed-rate mortgage peaked at 4.87 percent
in November last year, and rates have consistently dropped since then. The 30-year rate stood at 3.62 percent in August,
which is 84 basis points below the January 2019 rate of 4.46 percent.
The Wisconsin Affordability
Index represents the fraction of the median-priced home that a buyer with
median family income can qualify to buy, assuming a 20 percent down payment
with the remainder financed using a 30-year fixed-rate mortgage at current
rates. Even with the median price going up 9 percent over the last 12 months,
the decline in mortgage rates kept the index stable. The index stood at 197 in
August, which is actually1.5 percent above the levels of August 2018.
“While home prices always
heat up in late spring and summer, the good news for buyers is that they
typically settle down as we move into the fall and winter seasons,” said Theo. The
annual appreciation rate for existing home prices has been 7.6 percent through
the first eight months of this year, and if that rate of growth continues
through the end of the year, median prices should remain below the $200,000
mark for the rest of 2019. “With the Fed clearly in a rate-cutting mode, we expect
more downward pressure on mortgage rates, which should result in modest
improvements in affordability over the next few months,” Theo said. He noted
that this is an excellent time to re-engage with a REALTOR® who is
experienced. “The fall and winter months are great times to find housing deals,
and this is especially true this year as mortgage rates approach their historic
low levels,” said Theo. He cautioned that inventories remain very tight.
“Getting pre-approved for financing, coming in with a clean offer and moving
quickly is still the formula for success,” he said.