June 21, 2006
The results being reported this month are both encouraging
and discouraging. First, even with all the negative economic and political
news that has evolved this year we had an up month.
We had 7,401 closings in May for single family housing or an
increase of 2.7%. However, after lags have been reported, April is still
negative. We are down only 90 single-family closings in April, so I consider
that to be flat rather than negative. If this holds up, it would be our
first down period since January 2003.
But May is back up and we are still up by a comfortable
margin for the first 5 months of 2006. Single family detached had 6,400
closings in May or a 3.6% increase from May 2005. Condos and townhomes are
actually showing a decrease of 2.2%, but after lags are reported, should be
positive.
We had a few records broken for average-price in May. Single
family detached had an average price of $268,094 in May. This easily
surpassed the previous high of $265,094 set last June. This was also a 5.4%
increase over the same year ago period and the greatest year-to-year
increase so far in 2006.
Condos and townhomes had an average sale price of $198,346
in May. This is an increase of 7.7% over May 2005 and also an all-time high.
I talked with an agent last week and she said "you keep reporting an up
market, but all I see is standing inventory." I asked her where she did most
of her business and it was in East Cobb in the higher priced homes. I then
looked up what the months supply was for $500,000+ homes in East Cobb in zip
code 30067 and it was over 12, while a year ago it was around 9. This was a
large year-to-year increase and I noted where East Cobb had a year to year
increase in closings, but the average price was under $300,000. So, yes, one
part of the market was down, but other price-points were still strong.
When a housing market starts to slow, traditionally it is
the high end and rural or farther out markets that slow first. I believe
months-supply reporting is one of the best ways to gauge a market. In May,
months-supply went up considerably from April. Single family detached-new
went from 8.1 to 8.7, single family detached-resale went from 6.5 to 7.1,
condos and townhomes-new went from 7.2 to 7.8, and condos and townhomes-resale
went from 9.3 to 9.8. However, looking year-year it was not as bad, but
there is an underlying trend that does not look good.
The months-supply trend from April 06 to May 06 increased
substantially, while from April 05 to May 05 it went down. If this trend
continues, supply out pacing demand, prices will start to decline.
Thank you,
Steve Palm
Smart Numbers
