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Resale sales Analysis from August
Wednesday, October 08, 2008
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The August ARMLS1 Reports reported sales of 5,720, which is a decrease of 246 from July. On a seasonally adjusted basis sales were up 1,370 from July 2007.
September 2008
Resale Sales Analysis
The August ARMLS1 Reports reported sales of 5,720, which is a decrease of 246 from July. On a seasonally adjusted basis sales were up 1,370 from July 2007.
Sales Patterns
There are several different factors that interact to make up the current sales numbers. One of the most significant is the seasonal pattern clearly seen in the graph below. The winter months show the lowest sales volume, while the summer months are the highest in sales. This basic pattern is true for each year displayed.
A second factor is an abnormal market condition. The investor/speculator craze in 2004 and 2005 was just such a condition. Therefore comparing sales numbers to those time periods shows a significant decline, which is not an accurate indication of the health of the Phoenix area real estate market. Sales similar to the 2002 and 2003 sales volume represent a normal sales level for the Phoenix metro area market with current interest rates and job growth.
Historical Patterns
In addition to the seasonal pattern, note the monthly sales volume increase of each year from the previous year. This pattern existed throughout 2002-2005, until twenty-eight months ago. In these last twenty-eight months sales volume has been well below that of the same month a year prior. This relationship is shown in the graph below.
Commentary
The sales level for the past nine months is far below the historical norm. Lack of consumer confidence is likely the major factor. Counter balancing this lack of consumer confidence is a growing pent up demand for the purchase of houses to support the occupant's lifestyle. We are not making a prediction as to when the pent up demand will overcome the resistance of the lack of consumer confidence, but when it does happen there will likely be a surge in buying.
An important phenomenon to understand is the very significant jump in sales between 2003 and 2004. For most of 2004 and 2005 sales numbers were much higher than would normally have been expected because of the excess home purchases for non-owner occupied purposes. Investor/speculator buying was a significant contributor to this increase, and we are now seeing many of these properties re-listed on the market.
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