November 2019 Home Sales Report
Weak Inventory Constrains November Home Sales and Drives Up Prices
Date: December 16, 2019
MADISON, Wis. — Tight
inventories continue to be the key driver of Wisconsin’s housing market,
according to the most recent analysis of the existing home market by the
Wisconsin REALTORS® Association. Specifically, closed sales in
November were slightly below those of November 2018, falling 0.8 percent, and
median prices rose 6 percent to $194,000 over that same period. On a
year-to-date basis, home sales trailed the pace established in the first 11
months of 2018 by just 1.4 percent, whereas median prices increased 6.9 percent
to $197,500.
“As we
close in on the year-end, it’s clear that we are going to be very close to the sales
levels we’ve seen the last couple of years, but the tight inventory levels have
kept our growth in check,” said WRA Chairman Steve Beers. Inventory levels do fluctuate
on a seasonal basis, rising during peak sales periods in the summer and then
falling during the winter period. However, inventory levels peaked at 5.2
months of supply in June and July of this year, which is below the six-month
benchmark that characterizes a balanced market. With November inventories falling
to just four months of supply, the number of homes for sale has tightened over
the past 12 months, keeping Wisconsin a seller’s market.
“The inventory problem is most pronounced in our large
urban areas and homes selling at lower price points,” said Beers. The counties
that comprise our metropolitan areas had just 3.3 months of supply in November
compared to 6.8 months of supply in rural areas. A review of the last 12 months
shows that the tightest supply levels were for homes selling between $125,000
and just under $200,000, where there were just 3.1 months of supply. “Starter
homes sell quickly, so buyers and sellers need to be ready to move quickly once
those homes hit the market,” Beers said.
“We’re
experiencing the longest expansion in U.S. history, and it looks like it’s
going to continue for a while longer,” said WRA President & CEO Michael Theo. Real GDP growth was 3.1 percent
for the first quarter of the year, and it has been in the low 2 percent range for
the second and third quarters. Early indication suggests that economic growth
in the fourth quarter of this year will come at a pace close to the second and
third quarters. “We’ve also seen some promising signs that the trade disputes
with Mexico and Canada are being resolved, and that will be a welcome
development for the state economy,” said Theo. The U.S.-Mexico-Canadian trade
agreement is nearing ratification by Congress, which should provide some relief
for our agricultural and manufacturing sectors.
“Even
though home prices continue to rise at a robust pace, they were offset by
improvements in income and lower mortgage rates, so our affordability has
actually improved,” said Theo. Mortgage
rates are down significantly, dropping from 4.87 in November of last year to 3.7
percent last month. The Wisconsin Housing Affordability Index shows that
fraction of the median-priced home that the buyer with median family income can
afford to purchase, assuming 20 percent down and the remaining balance financed
using a 30-year fixed-rate mortgage. Overall, the Wisconsin Housing
Affordability Index increased to 213 in November, up from 201 in November of
last year. “There are still good opportunities out there, and the solid economy
and low rates make this an ideal time to buy,” said Theo.