Local housing sales drop prior to coronavirus pandemic
ST. JOSEPH — After a great start to 2020, the Southwest Michigan housing market took a step back in February.
January 2020 produced higher sales and lower prices when compared to January 2019. By the end of February, the opposite happened.
Alan Jeffries, association executive for the Southwestern Michigan Association of Realtors, said the number of house sales dropped significantly and selling prices set new record prices when compared to February 2019.
“The number of houses sold in February dropped to 181 from 235, for a 23 percent decrease,” Jeffries said. “Year-to-date, February fell 10 percent over February 2019. In the year-over-year comparison back to 2006, February 2019 remains the highest number of sales overall.”
Jeffries said selling prices jumped by double digits this February compared to a year ago.
The average selling price in February 2020 was $222,938, compared to $199,433 in February 2019 – a 12 percent increase.
The average selling price and year-to-date average selling price set new record prices for February in the year-over-year comparison.
The median selling price in February 2020 soared by 30 percent to $182,500, from $140,000 in February 2019. The median selling price also set new record prices for February in the year-over-year comparison.
With fewer houses sold, the total dollar volume was down 14 percent in February 2020. However, with January’s input, the total year-to-date dollar volume was up 12 percent.
The inventory of houses for sale dropped 2 percent from February 2019 (1,201 vs. 1,229).
This level gave the market a 4.9-month supply of houses for buyers. For comparison, in February 2009, there were 3,099 houses for sale.
Locally, the mortgage rate was 3.43 in February, down from 3.58 in January. Last year in February, the rate was 4.57.
Nationally, the Freddie Mac mortgage rate in February was 3.45 for a 30-year conventional mortgage – down from 3.51 in January.
Across the country
According to the National Association of Realtors, existing-home sales climbed substantially in February after a slight decline in January.
Of the four major regions, only the Northeast reported a drop in sales, while other areas saw increases, including sizable sales gains in the West.
Total existing-home sales rose 6.5 percent from January to a seasonally-adjusted annual rate of 5.7 million in February. For the eighth straight month, overall sales increased year-over-year, up 7.2 percent from a year ago.
“February’s sales of over 5 million homes were the strongest since February 2007,” said Lawrence Yun, NAR’s chief economist. “I would attribute that to the incredibly low mortgage rates and the steady release of a sizable pent-up housing demand that was built over recent years.”
Yun noted that February’s home sales were encouraging, but not reflective of the current turmoil in the stock market or the significant hit the economy will take because of the coronavirus and corresponding social quarantines.
“These figures show that housing was on a positive trajectory, but the coronavirus has undoubtedly slowed buyer traffic,” Yun said. “It is difficult to predict what short-term effects the pandemic will have on future sales.”
Compared to the prior month, February sales increased in the Midwest, the South and the West. Median home prices in all regions increased from a year ago, with the Northeast and South regions showing the strongest price gains.
Existing-home sales increased 0.8 percent in the Midwest to an annual rate of 1.29 million, up 4 percent from a year ago.
“For the past couple of months, we have seen the number of buyers grow as more people enter the market,” Yun said. “Once the social-distancing and quarantine measures are relaxed, we should see this temporary pause evaporate, and will have potential buyers return with the same enthusiasm.”
While offering a definitive forecast is extremely difficult in light of the national emergency, Yun said home prices will hold.
“Unlike the stock market, home prices are not expected to drop because of the ongoing housing shortage and due to homes getting delisted during this time of crisis,” he said.
Nationally, the total housing inventory at the end of February totaled 1.47 million units, up 5 percent from January, but down 9.8 percent from one year ago.
Unsold inventory sits at a 3.1-month supply at the current sales pace, equal to the supply recorded in January and down from the 3.6-month figure recorded in February 2019.
Source: heraldpalladium
