September 2011 Real Estate: Loss of Momentum from the Summer Market Activity

by Guest Author Scott Sambucci, Altos Research

“It would be so nice if something would make sense for a change.” – Alice, Alice in Wonderland

Ahhh…but it makes sense when you look at the data. Volatility is the norm and list prices lead transaction prices by several months. Those things are constant.

Since a peak in early July, we’ve seen week over week cooling of the housing market. The spring price and inventory bumps are over and we’re settling in for a long, cold winter.

Prices decreased in seventeen markets this month (seven markets reported a decrease in prices last month). In the markets that experienced increases in prices, the increases were small.

The weekly-sampled prices are still trending downward and the 90-day prices have begun their descent (illustrated in Figure 1). The 90-day prices were flattening last month. The declining curve will become more pronounced as the market continues to cool.
The loss of momentum from the summer market activity is unmistakable. Transaction statistics published by S&P/Case-Shiller will show the same loss of momentum in a few months.

The data in this report cover the narrow Altos 10-City Composite. Looking at the more broad, Altos Research 20-City Composite, we see the weekly price declines, and month over month declines are starting to translate into the smoothed 90-day trend line.

Key takeaways from 26 markets covered in this report:

  • The August, 2011 Altos 10-City National Composite median home price ticked down to $447,679 from $450,176 in July. This was the second consecutive month over month decline.
  • Inventory was up in 12 markets and down in 14 markets. The biggest inventory increase was Boston (1.34%) and the largest decrease was Tampa (-9.87%).
  • Only one market reported a price change larger than 2%, which was Tampa (2.21%).
  • The biggest price changes were small again this month, which is the third consecutive month of small price changes.
  • Prices decreased in 17 markets, which is a significant change from seven markets in July and one market in June.
  • The 7-day numbers are trending downward. The 7-day trends are always the first indication of a shifting market and the 90-day numbers are beginning to show declining prices, which was indicated in the flattening that was first reported two months ago.

Trends: September Home Prices

The national composite markets reported declining prices in 17 markets, compared to declining prices in seven markets last month. Two months ago, only one market reported declining prices. The number of markets with declining prices increased significantly, but none of them experienced a large month-over-month decrease.

The biggest price decreases were seen in Boston (-1.75%), Miami (-1.45%), and Philadelphia (-0.97%). Nine markets experienced price increases, with the top spots occupied by Tampa (2.21%), Detroit (1.65%), and Salt Lake City (1.32%).

Trends: Housing Supply

Inventory in the national composite was up again this month, and only slightly (0.05%). Overall inventory has increased 1.64% over the past three months.

The largest increases in inventory were not very large, but the largest decreases were significant.

The largest month over month decreases in inventory were reported in Tampa (-9.87%), Phoenix (-6.71%), and Charlotte (-3.48%). The largest month over month increase in inventory was Boston (1.34%). Half the composite markets reported rising inventory and half the markets reported declining inventory.

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Altos Research Price Composite MSA June ’11 July ’11 August ‘11 % Change From Last Month % Change Over Three Months 10-City National Composite $450,894 $450,176 $447,679 -0.55% -0.71%
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