June 2019 Home Sales Report
Weak supply hurts home sales and pushes prices up in first half of 2019
Date: July 22, 2019
MADISON, Wis. — Sales of existing homes turned
down sharply in June, which is traditionally the strongest month of
the year for home sales, while prices continued to rise at well
above the rate of inflation, according to the latest analysis of
the housing market by the Wisconsin
REALTORS® Association (WRA). June home sales fell
9.7 percent relative to June 2018, and the median price rose 10.3
percent to $215,000 over that same 12-month period. Comparing the
first half of 2019 to that same period in 2018, sales dropped 5.1
percent, and the median price rose 7.7 percent to
$195,000.
"Normally, a strong economy and low mortgage rates produce solid
sales growth, but our persistent lack of homes for sale kept June
sales well below last year's levels," said WRA Chairman Jean
Stefaniak. The strong demand for housing was fueled in part by
record-setting low unemployment rates of just 2.8 percent for both
April and May.
Although inventories do tend to rise during the peak sales
periods, Wisconsin's seller's market continued in June, with just
five months of supply. This was only slightly lower than June 2018
when inventories stood at 5.1 months.
"Inventories were especially tight in the larger cities in the
state," said Stefaniak. Specifically, the counties that comprise
metropolitan areas, which are counties with cities of least 50,000
population, had just 4.1 months of supply in June. Counties with
smaller towns and cities, which the U.S. Census defines as
micropolitan areas of 10,000 to 49,999 persons, had relatively
balanced markets with 5.8 months of available supply. Finally, the
small rural counties had the most supply at 8.6 months and would be
considered a buyer's market.
"We've been on a bit of a roller coaster with sales over the
last few years, but the price appreciation has been consistent,"
said WRA President & CEO Michael Theo. Since January 2016, the
year-over-year sales growth has ranged between minus 12.2 percent
in December 2018 and 23.3 percent in November 2016. In contrast,
prices have increased at an annual pace ranging from 3.2 percent in
May 2016 to a high of 10.3 percent in June of this year. "It's no
surprise that we're seeing steady price increases with our strong
demand and limited supply," said Theo. In fact, the statewide
median price exceeded $200,000 for the first time on record in May,
and that continued in June. It should be noted that WRA records
date back to January 2007. Moreover, three of the six regions of
the state were above that benchmark in June. The highest-priced
region was the South Central region where the median price was
$260,250. The median price was $230,000 in the Southeast region and
$205,000 in the West.
"While affordability continues to slip, Wisconsin's housing
affordability remains well above the nation and the Midwest
region," said Theo. The Wisconsin Affordability Index
represents the fraction of the median-priced home that a buyer with
median family income can afford to buy, assuming a 20 percent down
payment and the remaining 80 percent financed through a 30-year
fixed-rate mortgage at current rates. The index slipped from 189 in
June 2018 to 185 in June of this year. "Even though home prices
increased by double-digit margins over the last year, mortgage
rates dipped below 4 percent, so we only saw a minor drop in
affordability," said Theo. The last time mortgage rates were below
4 percent was June 2017, and it stood at 3.8 percent this past
June.
The economic expansion has now moved into its
11th year, which makes this recovery the longest in
post-war history. "With a good economy, the weak supply has kept
sellers in the driver's seat, so buyers need to work with a
REALTOR® who is experienced and be prepared to move
quickly when the right opportunity presents itself," said Theo.