Home Sales Up in February?
Home sales were reported as being up for the month of February by the National Association of Realtors. This was a surprise to many economists who expected yet another decline in purchasing volume. Sales in Utah reflected the national numbers as well.
Alas, this report was yet another don’t believe the headlines, believe the numbers type of story. To get the true picture, I had to go to multiple sources.
Let’s start with the national picture. CNNMoney reported Home sales rise slightly on biggest-ever price drop.
The National Association of Realtors reported that sales by homeowners rose 2.9% in February to a seasonally adjusted annual pace of 5.03 million, up from January’s reading of 4.89 million. It was the first month-over-month rise of the annualized pace since July.
The volume of sales were up in February over January. That’s actually good news in itself, but I disregard month over month comparisons. It’s year over year that matters.
Though February’s pace beat economists’ expectations, sales last month were still down 23.8% from a year earlier.
In reality, sales volume was down and so were prices -
The median price of a home sold during the month fell 8.2% to $195,900 from $213,500 a year earlier - the largest year-over-year price drop on record.
Salt Lake’s existing home sales were a bit tougher to figure out. KSL.com reported yesterday -
Home sales jumped 19 percent in February from January according to Salt Lake Board of Realtors Vice President Ryan Kirkham. That represents a huge change from the same time a year ago.
The brief article concluded - Prices were down 4 percent last month.
This morning the Tribune clarified the median price -
Locally, the median sales price for homes and condos sold last month was $225,000, down 4 percent from $234,950 in January and off 1 percent from a year ago.
In Salt Lake, sales are up, but median prices are declining. Considering all the fear in the financing side of real estate, I consider these numbers encouraging, but one month doesn’t constitute a trend.
A few weeks ago I was having lunch with some mortgage brokers and the subject of prices in the valley came up. One asked the very relevant question, “Are prices in Utah going up or going down?” He explained he had a friend with two high-end spec homes in Draper that he kept getting low ball offers on. His friend wanted to know if he should take the offer or wait until the market turned. I suggested the Salt Lake real estate market is a tale of two price ranges. Homes above $400,000 are having a very tough time selling and that is where the biggest price drops are coming from. Some new neighborhoods in Draper, West Jordan, Riverton and Herriman are suffering from foreclosures due to mortgage fraud and speculation which is driving down demand and prices.
On the other hand, demand for homes less than $200,000 in decent neighborhoods is still very strong. The answer to the question depends on your price range. We’ll have to see how the quarter finishes up, but I think there will be very little appreciation reflected in the overall numbers. However, homes in certain price ranges and certain neighborhoods won’t be affected. I think the volume of sales reflects demand still exists for housing in Salt Lake.