July 2021 Home Sales Report

Home Sales Moderate in July as Prices Continue to Rise

Date: August 23, 2021

July 2021 at a glance

  • July 2021 home sales fell 14.2% relative to July 2020, and the statewide median price rose to $250,000 in July, an increase of 10.7% over the past 12 months
  • Every region in the state experienced a decline in sales over the last 12 months, with the strongest reductions in the Central region, down 24.9%; the North region, down 22.4%, the West region, down 19.8%, and the Northeast region, down 17.5%. The reduction was less severe in the more urban regions of the state, including the South Central region, down 11.2%, and the Southeast region, down 7.8%.
  • On a year-to-date basis, sales are still in positive territory, with existing home sales up 3.9% for the first seven months of 2021 relative to that same period in 2020. Median prices are up 12.4% to $240,000 year to date
  • The housing market continued to be hampered by low inventory levels, with just 3.3 months of available supply in the market. This is well below the benchmark of six months of supply that characterizes a balanced market.
  • Total listings are 11.0% lower than 12 months earlier in July 2020, but this is a significant improvement compared to how the year began. Total January listings were 30.7% lower than a year earlier.  
  • Average days on the market dropped 27.8% compared to July 2020, falling from 90 days to just 65 days. This is the lowest level for days on the market since the WRA began tracking this data in January 2005.  
  • Housing affordability only dropped 6.5% over the past year, as lower mortgage rates helped offset the significant increase in existing home prices over the past 12 months.  

Analysis from the experts

Sales and inventory

"It’s important to keep the sales figures in perspective. We set a record for month of July sales last year, as the economy began to recover from the lockdowns in the spring of 2020. With inventories shrinking over the last 12 months, we knew it was going to be difficult to match the record sales we saw in July 2020. REALTORS® are working hard to move homes quickly, which is reflected in the record-low average days on the market. There are still good opportunities in this market, but buyers need to move quickly because competition is fierce."

Mary Duff, 2021 Chair of the Board of Directors, Wisconsin REALTORS® Association

The housing asset as an inflation hedge

"Inflation pressures have been growing this year, with consumer prices increasing from an annual pace of just 1.4% in January to 5.4% in June. The annualized rate was unchanged in July, which is welcome news. One way to hedge against inflation is to purchase assets that appreciate faster than the inflation rate. Historically, the housing asset has been an excellent inflation hedge. Between 2012 and 2020, the annual pace of inflation has ranged between 0.1% and 2.4%. In contrast, Wisconsin median home prices rose between 1.3% and 11.1% on an annual basis over that same period. Even during the peak inflation months in June and July this year, median home prices rose by at least twice the rate of inflation. Thus, over the last decade, Wisconsin housing has been an effective way to protect homeowners from the consequences of inflation.

Dave Clark, Marquette University Economist and WRA Consultant

Home prices and affordability

"Housing demand conditions remain strong, fueled by very low mortgage rates and a growing economy. However, the ongoing supply problems have pushed prices up at well above the rate of inflation, and this has reduced our affordability. Fortunately, we continue to see only modest erosion in affordability because mortgage rates remain quite low. The 30-year fixed-rate mortgage has been below 3% for the third straight month. As a result, the Wisconsin Housing Affordability Index shows that a buyer with median family income can afford to purchase nearly twice the median-priced home in the state assuming 20% down and the remaining balance financed with a 30-year mortgage. Working with a REALTOR® who is experienced increases your chance of finding the home that best fits your family’s needs."

Michael Theo, President & CEO, Wisconsin REALTORS® Association


 

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