February 2020 Home Sales Report
Wisconsin sets winter record for home sales
Date: March 16, 2020
MADISON, Wis. – Wisconsin
set a new winter home sales record with December through February sales topping
14,000 for the first time, according to an analysis of existing home sales by the
Wisconsin REALTORS® Association (WRA). Although February sales were
relatively flat, falling 0.9% over the past 12 months, robust sales for the
previous two months averaged 13.9%, propelling sales for the winter season to a
new record. Continued limited inventories pushed prices up more than three
times the rate of inflation this winter, including the month of February during
which median prices increased 8.6% to $190,000 over the February 2019. In
contrast, the annual inflation rate stood at 2.3% in February according to the
most recent consumer price data released by the U.S. Bureau of Labor Statistics. Nonetheless, affordability remains strong due primarily to a fall in
mortgage rates.
“We hit this record even though inventories tightened
to the point where every region of the state is now a seller’s market,” said WRA Chairman Steve Beers.
Housing analysts view a market as balanced when there are six months of
available supply. Wisconsin dropped to just 3.4 months of supply in February. “Supply
was tightest in the more urban areas, but even rural areas slipped below 6
months of available inventory,” said Beers. The large metropolitan areas had
just 2.9 month of available supply in February; followed by micropolitan areas,
which have a population between 10,000 and just under 50,000 residents, which
had 3.8 months of supply. The small, rural counties with under 10,000 people
had 5.5 months of available inventory in February, down from 6.5 months a year
earlier.
“Mortgage rates have fallen to near record levels, which
is good for affordability,” said WRA President & CEO, Michael Theo. The
30-year fixed-rate mortgage stood at 3.47% in February, which is down from 4.37% a year ago.
The all-time monthly low point was 3.35% in November and December of 2012. The
Wisconsin Housing Affordability Index shows that fraction of the median-priced
home that a typical buyer with median family income can afford to buy, assuming
20% down and the remaining balance financed with a 30-year fixed mortgage
at current rates. The index was 226 in February 2020, up from 219 in February
2019. “Our housing was more affordable than the nation and Midwest region,”
said Theo. The national index was 161.8 in December, and the Midwest index
stood at 211.5 for that same month.
“While the economy has been on solid footing, we can’t
ignore the elephant in the room, and that’s the economic turmoil created by the
coronavirus,” said David Clark, Marquette University economist and consultant
to the WRA. In a global economy, all economies are interconnected, and this
pandemic has already created significant disruptions to supply chains. “The best-case
scenario is that the impact of the coronavirus is short-lived, but the longer
it persists, the greater will be the economic impact,” said Clark. Michael Theo
noted that REALTORS® will continue to serve their clients during
this tumultuous period. “The bottom line is affordability continues to improve
as mortgage rates approach record-low levels, and a REALTOR® who is experienced
can find buyers the most home for their budget,” he said.