August 2020 Home Sales Report
Wisconsin Housing Market Records Record Sales for Summer
Date: September 21, 2020
MADISON, Wis. – It’s been quite a run for the Wisconsin
real estate market this summer as the re-opening of the state’s economy in June
combined with record-low mortgage interest rates resulted in a new three-month
record in home sales, according to the most recent analysis of the state
housing market by the Wisconsin REALTORS® Association (WRA). Focusing
on the August 2020 market, sales rose 0.7% relative to August 2019. At the same
time, tight inventories drove median prices up 14.1% to $235,000. On a
year-to-date basis, existing home sales were just 1% below the first eight
months of last year, and median prices rose 8.8% to $219,500.
A review of
summer home sales indicates growth of 2.8% compared to the June-through-August
period of 2019. Although June home sales saw a modest decline relative to that
same month in 2019, very robust sales growth in July and a slight improvement
in the August market pushed summer home sales to 27,795, which is the strongest
summer sales volume on record for the state.
“We’ve seen
remarkable resilience in this market, given the strong headwinds we faced this
year,” said WRA Chairman Steve Beers, noting low inventories have kept the
state in a strong seller’s market for the last three years, which has limited buying
opportunities. Moreover, the recent COVID-induced recession effectively shut down
the housing market in the latter part of the spring. “The good news is that
mortgage rates have never been lower,” said Beers. The 30-year fixed-rate
mortgage continued its downward trend, falling to 2.94% in August, setting a
new record low for the fifth straight month, and that has really fueled housing
demand.
Not surprisingly,
the strongest regional home sales in Wisconsin were seen in the North region,
which is more rural. Rural regions generally have more available inventory compared
to urban regions of the state. The North region had 5.9 months of supply in August,
and sales were up 16.5% over August 2019. The Central region had sales up 5% with
4.1 months of supply. In contrast, the more densely populated counties in the Northeast,
Southeast and South Central regions had between 3.5 and 3.9 months of supply,
and their home sales were relatively flat over the past 12 months. “These
regional differences also show up in measures of time on the market,” said
Beers. Homes in the North region were on the market an average of 130 days in
August, and they averaged 103 days in the Central region. By comparison, they
averaged between 72 and 93 days on the market in the other regions of the state.
“The clear takeaway is that if you are looking for a home in the northern and
central part of the state, you have some options, but if you want to find a
home in the bigger cities, you better be ready to move quickly,” he said.
“Tight supply and
strong demand have really driven our home prices up,” said WRA President &
CEO Michael Theo. The median price in August spiked up 14.1% over the last 12
months, and the median price for the first eight months of 2020 increased 8.8% compared
to that same period last year. “The low mortgage rates have been our salvation
on the affordability front,” said Theo. Affordability fell 7.8% in August,
compared to its level a year earlier. “Still, Wisconsin housing will remain
affordable as long as mortgage rates remain low,” said Theo. He also pointed
out that new construction has improved in 2020, which is a promising sign. Through
July, single-family housing units authorized by building permits were up 9.3% over
the first seven months of 2019. “Hopefully this trend will continue and help to
eventually ease the supply problem in the state,” said Theo.
“The national
economy appears to be on a solid growth path in the third quarter, according to
the New York Fed, and this has helped improve the labor market,” said David
Clark, Marquette University economist and consultant to the WRA. The New York
Fed’s predictions of the annual pace of real GDP growth indicated third-quarter
growth of 15.6%. This has been a driver of labor market growth as the number of
unemployed in the U.S. dropped by 2.8 million persons in August, lowering the
national unemployment rate by 1.8 percentage points to a seasonally adjusted
8.4%, according to the U.S. Bureau of Labor Statistics. “We’re still well above
the pre-recession unemployment rate of 3.6% in January, but it’s important to
note that the rate spiked to 14.7% in April, so we’ve made up a lot of ground
in just four months,” said Clark. He noted that the Fed’s commitment to keep short-term
interest rates near zero for the next three years should continue to stimulate
housing market demand.
“Low mortgage
rates will also keep housing affordable, which serves the Millennial generation
well as it shifts to owner-occupied housing,” said Theo. He pointed out that
consulting with a REALTOR® who is experienced is critical in a tight
market with strong demand. “There is often a short window between finding the
home that meets your needs and closing the deal with the seller, and a REALTOR®
will help you successfully navigate the buying process,” said Theo.