The market is "ever-so" slow right now.  Sales are still closing from the Tax-credit program and beyond giving us record reporting of sales closed (almost 900 in May - the highest month since 2007), however the slowdown is clear.  There are roughly 400 new contracts written in May and the same pace (if not a slight decline) is in the works for June.  Pendings have fallen below 2100 (a benchmark number that creates inventory balance in our market).  With only 200 +/- contracts written in June, there's no wonder the number of showings and offers is so low.  It's become "all price" again, which means "declines." 

Another indicator is the mortgage application numbers which are down nearly 40% since April.  However, they increased 7% last week, showing/telling us that we are at the worst of the "tax-credit hangover" right now.  On top of that, nearly 3 out of 4 mortgage applications are for refinance, not purchase, due to the exceptionally low rates created indirectly by the European crisis. 

New homes starts, reported today, show that that sector has seen a plummeting of confidence and a 15% reduction, even below reduced expectations to an annualized 565,000 (downwardly revised from 650,000 which was also downwardly revised after the tax credit expired). 

Predictions?  May through July will be very low new-sales months.  July through September will be lower than expected closing months.  After this slump, sales will pace between 650-750 for the next 12 months, which means, short-term, depreciation will continue followed by one year of flat prices. 

If we haven't had at least one showing in the last two weeks, it's time for a 3-5% price reduction.

Trackbacks (0)

Comments (0)