2015 February Home Sales Report

Home Sales and Median Prices Grow in February

Date: March 23, 2015

MADISON, Wis. — The Wisconsin housing market showed signs of modest improvement in existing home sales in February even as median prices continued to grow at a robust pace, according to an analysis of the statewide housing market by the Wisconsin REALTORS® Association (WRA). Home sales in February 2015 grew 1.8 percent compared to February 2014, and median prices increased 6.1 percent to $137,900 over that same period.

“We know the months between December and February are traditionally low-volume months for home sales in Wisconsin, so it’s good to see some improvement over last year,” said Dan Kruse, WRA board chairman. Comparing December 2014 through February 2015 with that same period in the previous year, winter sales are up about 1.2 percent. “While the state is moving in the right direction, it’s important to remember that sales last year were hampered by very cold temperatures, and so this is really only a slight improvement,” said Kruse. “We’re hoping to see a bounce in sales moving into the spring and summer — the two seasons where we sell the most homes,” he said. In a typical year, the three winter months only account for 16.9 percent of annual home sales. This is in contrast to 27.1 percent of annual sales that usually occur between March and May, and 32 percent that occur between June and August.

The statewide median price rose to $137,900 in February, which is a 6.1 percent increase compared to February 2014. This is the second straight month of median price appreciation in excess of 6 percent. “In fact, home prices have consistently risen over the last three years,” said WRA President and CEO Michael Theo, noting median prices have been rising on an annual basis for 35 of the last 36 months. Since February 2012, prices have risen 20 percent. This three-year price appreciation is due in part to shrinking inventories. In February 2015, 7.5 months of inventory were available statewide, which is considered a balanced market. In contrast, three years ago, a 12.1-month supply was available, so inventories have fallen substantially. There is also a significant difference between rural counties, which currently have 11.7 months of supply, compared to urban counties, where inventory levels are down to 5.9 months.

“While these conditions have made housing slightly less affordable, Wisconsin housing remains a good value,” Theo said. The Wisconsin Housing Affordability Index shows the percent of the median-priced home that a household with a median family income can afford to buy, assuming a 20 percent down payment with the remainder financed using a 30-year fixed mortgage at current rates. Although the Wisconsin index stood at 289 three years ago in February 2012, it is still relatively high at 251. “This means that creditworthy buyers with typical income levels can still afford to buy about two and a half times the median-priced home in Wisconsin,” said Theo. Low mortgage rates, as well as modest state job growth that has helped to grow income levels, keep the dream of homeownership attainable for middle class families.

The most recent state jobs report shows Wisconsin’s unemployment rate dropping to 4.8 percent in February, the lowest point since the middle of 2008. With the national economy showing continued growth, the Fed has recently signaled its intention to raise interest rates to keep the economy from overheating. “With interest rate hikes on the horizon and relatively tight inventory levels, especially in urban counties, this is really an ideal time to get into housing while it is still affordable,” said Theo. He encouraged buyers to move quickly if rates start increasing. “Using an experienced REALTOR® is one of the best ways to take advantage of the opportunities that still exist in this market,” he said.

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