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Average $/SF Drops Below $100

On December 21, 2008, the average price per square foot for monthly sales across all areas and types was $99.66, having fallen nearly 6% from November 21's figure of $105.85.

The last time the measurement stood below $100 was on September 28, 2002.

Pricing Update

On November 15 we gave a 30 day forecast that average sales $/SF would fall to the range $98.17 to $102.18 with a 93% confidence. Our midpoint prediction was $100.18. This was a further test of our technique for predicting future sales prices based on current pending $/SF.

As of December 15, the average $/SF for monthly sales across all areas and types was $101.81, down 3.9% from $105.94 on November 15. Note that the latter figure has been adjusted slightly since November 15 due to additions and changes to ARMLS recorded sales data since then. The actual figure of $101.81 is within our predicted range and higher than the midpoint prediction. We see that pending listings are still taking quite a bit longer to close than in the summer months. We also saw another reduction in the sales price percentage of list price from 95.25% on November 15 to 94.80% on December 15.

Today the pending listings for all areas & types show an average list $/SF of $103.36. This is considerably below the average list $/SF for homes sold in the last month ($106.64). This suggests that pricing will fall substantially in the next 30 to 50 days. The relationship between these measurements can be seen clearly on the list price per square foot chart.

Our mid-point forecast for January 18 is currently $94.89, and we have a 93% confidence that it will fall within ± 2% of this mid point, i.e. in the range $92.99 to $96.79. The confidence level for ±3% is 98% and for ±4% is 99.5%.

The implication is that overall average sales $/SF is expected to fall in the next month by between 4% and 8%.

Around January 18 we will check the accuracy of this projection and report back again.

Nominations for Most Improved Market

We are big fans of Days Inventory (see definitions) as a measure of the current health of a specific market. This is not a volatile measurement and it is not affected by seasonal patterns, based as it is on annual sales rates. As a result, when significant movement occurs, it is something to take note of. Some areas of the valley have seen large drops in this measure while others are holding steady and others have seen large increases. A major drop in days inventory is a sign of a market that is improving, since sales have increased, active listings have dropped, or a combination of the two.

Using Days Inventory by City as a measure, the nominations for Most Improved Market (it is Golden Globe time) are (in alphabetical order):

1. Anthem
2. Arizona City
3. Avondale
4. Buckeye
5. El Mirage
6. Goodyear
7. Litchfield Park
8. Maricopa
9. Queen Creek
10. Surprise
11. Tolleson

All the above cities have seen a reduction is days inventory of 100 or more since January 2008. This "improvement" corresponds to cities which have seen some of the largest reductions in pricing. This should not be surprising - a large reduction in price makes a home much more affordable, stimulating demand which in turn reduces the supply.

The most significant increases in Days Inventory are found in

1. Cave Creek
2. Fountain Hills
3. Paradise Valley
4. Scottsdale
5. Tempe

In contrast to the first list, these are cities where pricing has been far more resilient. There have also been much lower levels of foreclosure activity, which is a key reason for the pricing strength. A consequence of this situation is that their price "premium" relative to other cities has increased. Despite the desirability of properties in these cities, demand has fallen and supply increased, leading to the current situation with record levels of inventory and unusually low monthly and annual sales rates.

There has been a very strong shift in sales volume away from the more expensive cities to the areas where foreclosures are high. This has a major mathematical side-effect. Average and median pricing for the whole valley is pushed far lower than if the high-end market was experiencing normal sales volumes.

Sales to Investors Growing

Sales to investors increased from under 8.7% of Maricopa County residential sales in September to 12% in October and 13.4% in November.

The investor percentage of sales was particularly high in El Mirage, Phoenix, Sun City and Glendale.

September sales were boosted by owner occupiers who were taking advantage of the last chance to use seller-funded down payment schemes. Since then we have seen lender-owned properties take a fast increasing share of sales, and investors are clearly significant buyers of these properties. Some are being purchased for long term rentals and others for fix-and-flip.

Market Summary for Greater Phoenix

Sales volume weakened sharply in November, falling 21% from October 2008. However this is still up 23% compared with November 2007. Another positive signal is that pending sales remain high, even slightly higher than last month and much higher than in 2007.

The market is dominated by foreclosures to an even greater degree than last month. 57% of the homes sold in November were lender owned properties and another 14% were pre-foreclosures or short sales. Only 29% of sale were "normal" transactions.

Among active listings: 56% are normal, 21% are in pre-foreclosure or short sales, and 23% are already owned by a lender.

We still have a large number of homes pending foreclosure – about 28,500 in Maricopa county alone, although this number has not changed much in the last 8 weeks as several lenders have canceled trustee sales while they try to re-negotiate with the borrowers.

New foreclosure notices in Maricopa county are still running at about 240 per day using the 90-day average and we have a record number of homes being sold by the trustee & over 95% of these go back to the bank. But the 90-day average daily foreclosure notice rate has stopped increasing, and recent weekly volumes have eased.

On a $/SF basis we’re at an average of $103 across the valley based on November ’s MLS sales, which is down 45% from the peak of $189 reached in May 2006. But remember this is just an average – prices have fallen much less in areas with few foreclosures and much more in some with higher than average foreclosures. The pricing of pending listings suggests a further average $/SF price reduction for sales in December and January. The median sales price dropped from $164,500 in October to $154,500 in November, driven sharply lower by a huge number of bank-owned homes priced well under $100,000.

Bank owned properties are relatively thin on the ground in Rio Verde, Paradise Valley, Carefree, Wickenburg, Sun City, Sun City West & Sun Lakes. Some areas are much worse than average – ZIP codes 85009, 85019, 85031, 85033, 85035 for example, and lender owned properties dominate in several cities such as El Mirage, Avondale, Maricopa & Litchfield Park.

In general, recent pricing has been weakest in the West Valley, particularly west and southwest Phoenix and the neighboring cities such as Glendale, Tolleson and Laveen.

Demand right now is about 90% of normal, having dropped 5% in the last month but still a reasonable range. However, supply is at 179% of normal. So it’s still a great market for buying, as long as you have capital, good credit and don’t need to borrow more than 90% of the money. Bank owned properties typically sell for 20% to 30% below the normal market price, and so as long as you don’t mind fixing up the property and the landscape, you can find some real bargains. This is even more true in places where bank-owned properties are not too numerous and normal prices are still relatively high (e.g. Scottsdale, Fountain Hills, Paradise Valley, Cave Creek). We are seeing prices at 40% to 50% below normal in some of these places. The drop in pricing has occurred while rental rates are stable, so it is easy for a landlord to find homes that will "cash flow".

The market is still healthier than it was this time last year, but has deteriorated since mid-October as the general financial slump has eaten into demand. On the positive side, the foreclosure volumes appear to have reached a "top" and not increased further. This may start to ease the pressure caused by the huge supply of lender owned homes.

Unless otherwise stated, all figures quoted above are for "all areas and types" in the ARMLS database.

US Existing Home Sales Fall

Resales of U.S. single-family homes and condos fell 3.1% in October to a seasonally adjusted annual rate of 4.98 million, the National Association of Realtors reported on Monday November 24. Resales have sunk 1.6% in the past year. The inventory of unsold homes on the market fell 0.9% to 4.23 million, a 10.2 month supply at the current sales pace. The median sales prices fell 11.3% in the past year to $183,300. This is the lowest sales price since March 2004.

Let's compare the national picture with the situation in Greater Phoenix.

In October we recorded 5,378 total sales through ARMLS, down 12.5% from the 6,146 recorded in September. The annual sales rate stood at 56,301, up 3.5% from 54,368 in September. Therefore we took a bigger drop month to month than the US average, but saw an increase year on year instead of a fall. The big drop was largely due to the unusually high number of sales in September.

The inventory level at the end of October stood at 10.6 months, slightly worse than the national average. This is a deterioration since in September the Phoenix area was better than the US average.

The overall monthly median sales price for the month of October 2008 was $164,500. This was the lowest median sales price since June 2004. As of November 24, the equivalent monthly median sales price is $155,000. the lowest level since March 2004.

All the above Greater Phoenix numbers are for all areas and types of residential dwellings in the ARMLS database.

Pricing Update - Prices Near Bottom of Forecast Range

On October 16 we gave a 30 day forecast that average sales $/SF would fall to the range $105.72 to $110.03 with a 93% confidence. Our midpoint prediction was $107.87. This was a further test of our technique for predicting future sales prices based on current pending $/SF.

As of November 15, the average $/SF for monthly sales across all areas and types is $105.60, down 3% from $109.11 on October 16. Note that the latter figure has been adjusted slightly since October 16 due to additions and changes to ARMLS recorded sales data since then. The actual figure of $105.60 is within 2.15% of our midpoint prediction and just below the bottom of the predicted range. This is the highest margin of error we have seen to date. We did see a much smaller price drop in the last 30 days than in the previous 30, as we predicted. But the fall was still slightly larger than we were expecting. Analyzing the reasons for this, we see that sales were dominated by bank-owned properties to a greater extent than pending listings, and that pending listings have, on average, been taking quite a bit longer to close than in recent months. We also saw an unexpected sharp reduction in the sales price percentage of list price from 96.71% on October 16 to 95.25% on November 15. This latter factor alone is more than enough to explain the entire difference between forecast and actual pricing. It is also a negative signal for the market.

Today the pending listings for all areas & types show an average list $/SF of $111.36. This is just above the average list $/SF for homes sold in the last month ($110.87). This suggests that pricing will continue to fall substantially in the next 30 days. The relationship between these measurements can be seen clearly on the list price per square foot chart.

Our mid-point forecast for December 15 is currently $100.18, and we have a 93% confidence that it will fall within ± 2% of this mid point, i.e. in the range $98.17 to $102.18. The confidence level for ±3% is 98% and for ±4% is 99.5%.

The implication is that overall average sales $/SF is expected to fall in the next month by between 4% and 6%.

Around December 15 we will check the accuracy of this projection and report back again.

Price Range Analysis

The real estate market has rarely, if ever, shown such extremes of activity at opposite ends of the price spectrum.

For single family detached homes with list prices below $100,000 there were 824 ARMLS-reported sales in October 2008, a stunning 4237% growth over the 19 sales recorded in October 2007. With 5,457 active listings there is still plenty of new supply, but this represents only 6.6 months supply at the accelerating monthly sales rate. A very large proportion of these homes are lender-owned and many (but not all) of these are in distressed condition.

At the other extreme, there were only 4 sales of single family detached homes priced above $3,000,000 in October 2008, down 50% from the 8 sales in October 2007. The really shocking statistic is that there are now 585 active listings in this price range. At 4 sales per month this is more than 12 years supply. Now October 2008 was a particularly bleak month for high end sales, but in the full year from November 2007 to October 2008 there were only 122 sales of single family detached homes listed over $3,000,000. So based on the annual sales rate there is currently 1,755 days inventory, nearly 5 years. In the current economic climate one has to wonder where the buyers of these 585 homes are going to come from.

Another stark contrast - the homes below $100,000 are priced at an average of $59 per square foot. The homes priced above $3,000,000 are priced at an average of $633 per square foot. This pricing gap has widened to its greatest extent ever this month.

For more details of these and the other price ranges, please see Months Supply by Price Range and the Price Range Snapshots.

Market Summary

The good news is that MLS activity is still strong: sales are up 60% from this time last year and pending sales also up 60%. After a particularly strong September, due to people taking advantage of down payment assistance programs before they disappeared, October sales were some 16% below September. This is still quite respectable; about the same as in October 2002.

The bad news is the fact that the selling is dominated by the banks and the market is dominated by foreclosures.

Banks are now selling almost twice as many homes as homebuilders.

Among active listings: 65% are normal, 17% are in pre-foreclosure, 18% are already owned by a lender.

Among October MLS sales:  only 48% were normal, 10% were in pre-foreclosure (mostly short sales), while 42% were lender-owned.

We have a record number of homes pending foreclosure – about 28,000 in Maricopa county alone, although this dropped a little last week because the ex-Countrywide division of Bank of America canceled about 2,000 trustee sales.

New foreclosure notices in Maricopa county are running at about 240 per day on average and we have a record number of homes being sold by the trustee & over 95% of these go back to the bank. We have a record number of bank-owned homes being sold to investors & owner occupiers and this is driving prices down sharply in areas where foreclosures are plentiful. On a $/SF basis we’re at an average of $107 across the valley based on October’s MLS sales, which is down 43% from the peak of $189 reached in May 2006. But remember this is just an average – prices have fallen much less in areas with few foreclosures and much more in some with higher than average foreclosures.

Some areas have been affected only slightly by the decline in prices – ZIP codes 85007, 85013, 85018, 85024 are particularly strong. Also, bank owned properties are relatively thin on the ground in Sun City, Sun City West & Sun Lakes.

Some areas are much worse than average – ZIP codes 85009, 85019, 85031, 85033, 85035 for example. Bank owned properties dominate in El Mirage, Avondale & Litchfield Park.

Some outlying areas were affected strongly in 2006 and 2007, much earlier than Phoenix itself, but these are showing distinct signs of recovery now, e.g. Anthem, Queen Creek, Maricopa. Here supply and demand are in reasonable balance so the downward pressure on prices has eased. However a high proportion of properties listed are bank-owned or short sales. These are still areas in distress despite the stronger demand.

We forecast the market based on simple rules of supply & demand. Right now our biggest problem is over-supply. Developers built more houses than were actually needed. Investors purchased extra homes thinking there would be buyers for them. Demand right now is about 95% of normal, within a reasonable range. But supply is at 177% of normal. The main way this gets re-adjusted is for prices to go down. When prices go down, demand increases and the supply starts to get eaten away. This has already happened in places like Queen Creek – prices are way down, but although there is still a large inventory of unsold homes, sales volumes are very high. In fact Queen Creek is the third most active city for sales right now, after Phoenix & Mesa.

It’s still a great market for buying, as long as you have capital, good credit and don’t need to borrow more than 90% of the money. Bank owned properties typically sell for 20% to 30% below the normal market price, and so as long as you don’t mind fixing up the property and the landscape, you can find some real bargains. This is even more true in places where bank-owned properties are not too numerous and normal prices are still relatively high (e.g. Scottsdale, Fountain Hills, Paradise Valley, Cave Creek). We have seen prices at 40% to 50% below normal in some of these places. The drop in pricing has occurred while rental rates are stable, so it is easy for a landlord to find homes that will "cash flow".

The future depends on a number of factors. Prices are still falling, but if more lenders cancel foreclosures like Countrywide did last week, then this source of supply will start to fall and the downward pressure will ease. Many people who are current in their mortgage payment resent other homeowners being helped by their lender. However preventing that foreclosure in your neighborhood is going to help stabilize your home price, so when others are helped you are getting indirect help too.

The market is in fact more healthy than it was this time last year. But the market cannot improve much further until we see the number of foreclosures drop and an easing of the over-supply situation. Home builders have cut way back on their new builds, so it is now foreclosures that constitute the most significant source of homes for sale. The financial companies therefore hold the key to the future health of the market.

Existing Home Sales Jump to 13-Month High

The above was the headline in today's story about the National Association of Realtor's statistics for September. It is instructive to compare the figures for the whole country with those for the Greater Phoenix area. Here are the national numbers:

"Boosted by foreclosures and plunging prices, sales of pre-owned homes and condos rose sharply in September to the highest level in 13 months, an industry trade group reported Friday. Existing-home sales rose 5.5% to a seasonally adjusted annual rate of 5.18 million, the National Association of Realtors estimated Friday. Economists surveyed by MarketWatch expected sales to rise to a 5 million pace. It was the largest monthly percentage increase in five years. Sales of existing homes were 1.4% higher in September than they were a year earlier; it was the first year-on-year increase in nearly three years. The median sales price fell 9% in the past year to $191,600, the lowest since April 2004. Prices plunged 18.5% in the West region, driven by high levels of distressed sales."

The Greater Phoenix situation:

Sales of condos were 14% down year on year in September but sales of single family detached homes were very brisk. The ARMLS sales volume for single family homes was 5,536 which was a 11% advance on August's 4,989 and a 108% advance on September 2007. This was the largest year-to-year increase in monthly sales we have ever recorded. The median sales price for single family homes was $174,750 in September 2008, down 31% from $252,000 one year earlier. The median sales price was last at this level in May 2004.

Average $/SF Now Rolled Back 5 Years

On Saturday October 18, 2003 the average $/SF across all areas and types of homes was $108.89.

On Saturday October 18, 2008 the average $/SF across all areas and types of homes is $108.99.

A strange coincidence that these prices should be just 10c apart. On May 31, 2006 the same statistic reached $189.66, some 74% higher than today.

Pricing Update - Modest Fall Forecast by Mid-November

On September 16 we gave a 30 day forecast that average sales $/SF would fall to the range $108.75 to $113.19 with a 92% confidence. Our midpoint prediction was $110.97. This was a further test of our technique for predicting future sales prices based on current pending $/SF.

As of October 16, the average $/SF for monthly sales across all areas and types is $109.03, down nearly 8% from $118.34 on September 16. Note that the latter figure has been adjusted slightly since September 16 due to additions and changes to ARMLS recorded sales data since then. The actual figure of $109.03 is within 1.78% of our midpoint prediction and close to the bottom of the predicted range. This again provides evidence that we can fairly accurately predict future sales pricing over the short term - looking out some 30 days for a reasonably large market.

Having been accurate for six months now, we will continue to make specific forecasts for average $/SF pricing one month into the future.

Today the pending listings for all areas & types show an average list $/SF of $117.38. This is well above the average list $/SF for homes sold in the last month ($112.84). This is therefore a very positive indicator compared with what we saw in September, suggesting that pricing will fall much less in the next 30 days than they did in the last 30 days. The relationship between these measurements can be seen clearly on the list price per square foot chart.

We forecast that average sales $/SF over the next month will fall at a slower rate than in the past month. Our mid-point forecast for November 15 is currently $107.87, and we have a 93% confidence that it will fall within ± 2% of this mid point, i.e. in the range $105.72 to $110.03. The confidence level for ±3% is 98% and for ±4% is 99.5%.

The implication is that overall average sales $/SF is expected to fall in the next month by between 0% and 2%.

Around November 15 we will check the accuracy of this projection and report back again.

Yes - Active Listings Are on the Rise Again

On September 25 we noted that the active listing count was at a higher level than the month before. At the time we were not sure if this was just a blip or a something more.

Unfortunately, we have to confirm that this is a significant trend reversal. Today, October 13, we see 54,355 active listings across all areas and types. This a major jump upwards from the low point of 52,530 reached on September 2. Active listings are now rising sharply as can be seen here. This is being fueled by the increase in bank-owned inventory, although areas with few bank-owned properties are also seeing an increase.

The active listings by major city chart shows that this rising trend is affecting many but not all of the major markets.

We see increases in Phoenix, Avondale, Glendale, Queen Creek, Scottsdale, and especially Goodyear and Surprise. Chandler, Gilbert, Mesa and Peoria are relatively unaffected. Tempe is still on a modestly declining trend.

Paradise Valley not Alone

Yesterday we posted that Paradise Valley has more than 1,000 days of inventory. However, Paradise Valley is not alone in having extreme inventory levels. It is by far the largest market with this situation, but a number of small localities are experiencing the same effect.

As of October 1, 2008:

Tonopah - 1,331 days inventory (80 active single family detached listings, annual sales rate 22)

Rio Verde - 1,176 days inventory (197 active single family detached listings, annual sales rate 28)

New River - 976 days inventory (152 active single family detached listings, annual sales rate 57)

Wittmann - 912 days inventory (147 active single family detached listings, annual sales rate 59)

Eloy - 878 days inventory (96 active single family detached listings, annual sales rate 40)

Wickenburg - 849 days inventory (188 active single family detached listings, annual sales rate 81)

Carefree - 831 days inventory (109, active single family detached listings, annual sales rate 48)

1,000 Days Inventory in Paradise Valley

Paradise Valley is different from the rest of the Phoenix area for many well-known reasons. With prices far higher than any other city or town, its market is unique. In 2008 this market has behaved very differently indeed. In most cities and ZIP codes, inventory levels peaked in the spring and have been falling back over the last four to six months. See the Days Inventory by City charts to see these changes.

In contrast, Paradise Valley single family detached home inventory has doubled from 507 days in January to 1,014 days in the first week of October. We currently see 500 active MLS listings, and an annual sales rate that has fallen steadily from 458 in August 2005 to just 180 in October 2008. At the current monthly sales rate there is almost 3 years supply of active single family detached listings.

There are currently only 15 pending listings, but the average from 2001 onwards is 44.

Jumbo loans are hard to come by and their interest rates are now much higher than conforming loans. There is also a scarcity of buyers in this price range.

Anyone with a home to sell in Paradise Valley is going to need a lot of patience or a willingness to price more aggressively to get noticed among all the competition.

Prices have held very firm in Paradise Valley over the last two years while many surrounding areas have declined. The peak annual median sales price peaked at $2,100,000 as recently as July 2008. However we are now seeing distinct signs of weakness in the $/SF and median statistics. The annual median has fallen over 10% to $1,772,000 in the last 3 months.

See the Market Snapshot for Paradise Valley for full details.

September Sales Higher Than August

At the moment we are recording 6,101 sales through ARMLS for the month of September, which is nearly 8% higher than August 2008 and nearly 59% higher than September 2008. It is unusual for September to report more sales than August, but the disappearance of down-payment assistance loans probably encouraged eligible buyers to move in September rather than wait for October.

The September sales number will probably fluctuate over the next few days, as additions and corrections are entered, but we can confidently report for the first time that year-to-date sales have now overtaken 2007.

Average $/SF Now Down 40% from Peak

As can be seen in the table above, the average price per square foot for monthly sales across all areas and types is now down 40% from the peak of $189.66 reached on May 31, 2006. It currently stands at $113.79 per sq. ft. The last time average pricing was at this level was March 1, 2004.

It took 27 months to rise from $113.79 to $189.66 and 28 months to fall all the way back again.

Note also that the average $/SF for active listings is a record 63.7% higher than the average sales $/SF.

The big question now is how much of an over-correction are we likely to see.

Active Listings on the Rise Again?

For the last few months, sales volumes have been strong and the number of active listings has fallen well below the peak level of 58,334 reached in late October 2007. However, active listings have been increasing in number in the last four weeks, and for the first time since March 2008 we are seeing active listings at a higher level than the month before. This is not due to any fall off in sales, which continue to post very strong year over year growth. However the supply of foreclosed properties also continues to grow and pump up the supply. We will watch this development closely to see if the supply starts to outstrip demand over the next month.

Where Have Prices Fallen Hardest?

If you are looking for bargain properties, you probably want to know where pricing has fallen the most. You can easily find the answers at this page:

Annual Median Sales Price by ZIP Code

We use the annual median rather than the monthly median because some ZIP codes have very low sales volume which means the monthly median can be very volatile. The annual median is slower moving, so when a significant fall is seen, you can be sure it is due to a real and widespread drop in pricing, not a freak data point.

Picking out a few extreme examples from this chart:

• Phoenix 85009 - $74,550, down from $170,000 in January 2008 - down 56% in 9 months.
• Phoenix 85031 - $109,950 - down from $200,000 in September 2007.
• Phoenix 85033 - $115,000 - down from $205,000 in July 2007.
• Phoenix 85035 - $92,000 - down from $200,000 in June 2007.
• Maricopa 85239 - $157,000 - down from $258,000 in July 2006.
• Queen Creek 85242 - $175,000 - down from $258,700 in August 2006.
• Queen Creek 85243 - $146,000 - down from $252,450 in June 2006.
• Avondale 85323 - $180,250 - down from $264,900 in September 2006.

At the other extreme, a few examples of prices holding up relatively well:

• Phoenix 85004 - $317,450 - close to its peak of $328,500 reached in November 2006.
• Phoenix 85007 - $210,000 - only down 9% from its peak of $230,000 reached in March 2008.
• Phoenix 85013 - $259,950 - only down 10% from its peak of $290,000 reached in January 2008.
• Mesa 85207 - $309,750 - only down 11% from its peak of $349,000 reached in June 2008.
• Paradise Valley 85253 - $1,800,000 - only down 10% from its peak of $2,006,000 reached in June 2008.

Pricing Update - Steep Fall Forecast by Mid-October

On August 17 we gave a 30 day forecast that average sales $/SF would fall to the range $115.59 to $120.31 with a 92% confidence. Our midpoint prediction was $117.95. This was a further test of our technique for predicting future sales prices based on current pending $/SF.

As of September 16, the average $/SF for monthly sales across all areas and types is $117.59, down 3% from $121.24 on August 17. Note that the latter figure has been adjusted slightly since August 17 due to additions and changes to ARMLS recorded sales data since then. The actual figure of $117.59 is within 0.31% of our midpoint prediction and close to the center of the predicted range. This again provides evidence that we can fairly accurately predict future sales pricing over the short term - looking out some 30 days for a reasonably large market.

Having been accurate for five months now, we will continue to make specific forecasts for average $/SF pricing one month into the future.

Today the pending listings for all areas & types show an average list $/SF of $118.64. This is well below the average list $/SF for homes sold in the last month ($122.08). This is therefore a negative indicator compared with what we saw in August, suggesting that pricing will fall further in the next 30 days than they did in the last 30 days. The relationship between these measurements can be seen clearly on the list price per square foot chart.

We forecast that average sales $/SF over the next month will fall at a faster rate than in the past month. Our mid-point forecast for October 16 is currently $110.97, and we have a 93% confidence that it will fall within ± 2% of this mid point, i.e. in the range $108.75 to $113.19. The confidence level for ±3% is 98% and for ±4% is 99.5%.

The implication is that overall average sales $/SF is expected to fall sharply in the next month by between 5% and 6%.

Around October 16 we will check the accuracy of this projection and report back again.

Pending Sales Fall Nationally - Not in Phoenix

In a sign that the U.S. housing market may weaken in coming months, an index of sales contracts on previously owned U.S. homes fell 3.2% in July from the prior month, the National Association of Realtors reported today. The index, which is considered a leading indicator of existing home sales, was down 6.8% from the prior year.

However, as we have reported for the last 3 months, the pending sales count has been very healthy in the Greater Phoenix area. At the July peak, reached on 28th, the pending listing count (for all areas and types) was at 7,441. The highest point reached in July 2007 was only 5,511. So we were UP 35% in July year on year. June 2008 was somewhat higher than July 2008 with a peak of 7,619 reached on June 25. However the historic seasonal pattern shows us that this fall was much smaller than we would normally expect. Indeed August and September have continued to strengthen further relative to seasonal trends - pending listings currently sit at a record level of 72.2% above the same date in 2007.

Note that pending listings are a leading indicator of market activity and this suggests that Phoenix is further along the road to recovery than the overall US market.

A Tale of Two Cities

The market has fractured into many separate regions, and each is behaving very differently. Here I am taking just two examples - Anthem and Arizona City, and considering the market for single family detached homes only.

Good news for Anthem - the Cromford Market Index™ just topped 100, signifying a remarkable recovery in buying activity. Monthly sales are up 117% year on year, and pending listings are up 129%. Active listings are down to 409 from 682 last year, and months supply a reasonable 5.4 months compared with 19.5 in early September 2007. This is probably due in no small part to the price level - the average $/SF is down 29.5% year on year in Anthem, and the monthly median price now stands at $227,500, having been $330,000 in September 2007. See the Anthem Snapshot for more positive signs.

In contrast, Arizona City's Cromford Market Index™ has fallen below 50. Sales are up slightly year on year and pending listings are up 26%. The bad news is that the picture has deteriorated since early August 2008, when sales and pending listings were higher than today . Active listings, days on market and months supply have all increased in the last month. This is despite considerable movement in pricing. The monthly median is $85,500, down 34% from the $129,900 in September 2007. See the Arizona City Snapshot for more details.

To be pedantic neither Anthem nor Arizona City is actually a city - they are both unincorporated and defined as "census designated places".

New Records Set for Sales and Pending Growth

You could argue that the comparisons are easy, because at this time last year, sales volumes were dropping fast as the credit crunch started in earnest. Yet the recovery in volumes being achieved today is still remarkable. Sales are up nearly 46% year on year and pending listings are up over 58%. Both these figures are new record highs.

A large proportion of this activity involves bank-owned properties. A flood of foreclosed properties is still creating new inventory of homes for sale, but they are mostly being priced aggressively and moving off the market very quickly. Private sellers are being left behind in the rush. Where foreclosures are scarce, sales and pending growth is still very weak. The overall average days on market for active listings is still increasing as most private sellers are unable or unwilling to compete with the banks' pricing.

We continue to see the highest activity growth in locations like Anthem, Avondale, El Mirage, Maricopa, Queen Creek, Tolleson and West Phoenix with anemic growth in more upscale and adult-oriented communities including Fountain Hills, Paradise Valley, Sun City, Sun City West and Tempe. In the middle ground, Gilbert and Chandler are showing very healthy year on year growth.

Rarely have we seen such a huge disparity between different areas of Greater Phoenix metro. This can be clearly seen in the city snapshots and the ranking of cities by growth in sales and pending listings.

Banked Owned Properties Dominating the Market

The huge increase in foreclosures over the last year has resulted in a large supply of REOs (Real Estate Owned by the lender). The strategy of most of these lenders has been to price their property aggressively to try to move it off their books as soon as possible. The effect has been to lower sales prices and increase sales volumes. As you would expect, this has had the most dramatic results in the areas where REOs are most numerous.

For a chart showing REO sales as a percentage of total sales, please click here.

The cities within Maricopa county that had the highest proportion of REOs in July 2008 were El Mirage, Avondale, Tolleson and Queen Creek (Maricopa section). In each of these cities, REOs represented over half of the properties sold. It is therefore not surprising that these cities have also seen large increases in the monthly sales number. In El Mirage, Tolleson and Avondale, pricing has also dropped sharply in recent months. In contrast, Queen Creek pricing reached very low levels many months ago, reaching a lower average $/SF than at any date since we started recording data in 2000. Pricing in Queen Creek has not dropped very much in the last 4 months despite the high REO count, and buyers seem to be very willing to purchase these properties at the current price level.

Record Sales Volume Growth

A new record was set today for the annual growth in sales per month. At 40% year on year for the total ARMLS market, this represents a huge change in the activity level since August 28, 2007.

Last year at this time, sales volumes were declining steeply and would continue to do so for another five months. At only 3,938, the monthly sales rate was exceptionally weak, but average $/SF pricing for monthly sales had only declined by 2.1% from the prior year. We now see a monthly sales rate of 6,037 fueled by the dramatic change in pricing since last year. With an average $/SF decline of 31.9% in the last year, the bargain pricing of bank owned properties is bringing buyers back into the market in increasing numbers.

Four Years Roll Back

Over all areas and types covered by ARMLS, the monthly average $/SF for home sold is now at the same level as in August 2004. This is best seen in the average sales price per square foot weekly chart. The current figure is $119.80. Most of the decline has come in the last seven months, with a 23.7% decline since the first week of February.

Of course this is just an average. Some areas have declined much less and others much more. To see the $/SF for a specific city please refer to the average sales price per square foot by city.

Pricing Update

On July 18 we forecast that average sales $/SF would fall to the range $119.00 to $123.86 with a 92% confidence. Our midpoint prediction was $121.43. This was yet another test of the technique for predicting future sales prices based on current pending $/SF.

As of August 17, the average $/SF for monthly sales across all areas and types is $120.27, down 5.8% from $127.69 on July 18. Note that the latter figure has been adjusted slightly since July 18 due to additions and changes to ARMLS recorded sales data since then. The actual figure of $120.27 is within 0.96% of our midpoint prediction and well within the predicted range. This again seems to validate that we can predict future sales pricing over the short term - looking out some 30 days for a reasonably large market.

Having been accurate for four months now, we will continue to make specific forecasts for average $/SF pricing one month into the future.

Today the pending listings for all areas & types show an average list $/SF of $125.71. This is slightly above the average list $/SF for homes sold in the last month, quite a different situation from what we saw in July, suggesting that pricing will not fall so far in the next 30 days as it did in the last 30 days. The current list price per square foot for monthly sales is $125.40. The relationship between these measurements can be seen clearly on the list price per square foot chart.

We see average sales $/SF over the next month continuing to fall, but slower than in the past month. Our mid-point forecast for August 16 is currently $117.95, and we have a 92% confidence that it will fall within ± 2% of this mid point, i.e. in the range $115.59 to $120.31. The confidence level for ±3% is 98% and for ±4% is 99.5%.

The implication is that overall average sales $/SF is expected to fall in the next month by about 2%.

Around September 16 we will check the accuracy of this projection and report back again.

Lower Prices - More Sales

More sales have been closed on MLS and the total for July now stands at 6,052 (including all areas and types). Last month was unusual in that it corresponded with the changeover of the ARMLS database from MarketLinx Tempo to FBS flexMLS. This caused the sales numbers to be much more volatile at the end of the month. We expect this to settle down from now on.

A figure of 6,052 is quite remarkable.

First let's eliminate the 95 that were outside the Greater Phoenix area (e.g. Prescott, Show Low, Payson, etc.). Let's also eliminate 2 sales that, although they included a residential building, were basically sold for land value only (due to fire or total dereliction). That gives us 5,955 residential sales.

The same adjusted figure for June 2008 was 5,636, and for July 2007 was 4,557.

Thus we are reporting a 6% increase over June 2008 and a remarkable 31% increase over July 2007.

Who is selling these homes? Well the answer in a lot of cases is "the bank". We see a huge number of so-called REO sales where the lender is selling a home they obtained through foreclosure. There is no doubt that many lenders are adopting a strategy of offering their REOs at crazy-low prices to try to start a bidding frenzy. This seems to more effective at moving a property than just offering a small discount below normal market value. The eventual price achieved is still low by historic standards, but the bank gets rid of the property which is their primary objective.

For this reason we have seen median pricing and price per square foot drop very steeply in the past month, especially in areas where REOs are plentiful. The West Phoenix areas of ZIP codes 85009, 85031, 85033, 85035, 85037 and 85041 are vivid examples of this phenomenon.

We are doing further analysis of the REO effect and will publish more information later this month.

July Sales Rate Exceeds June

Over the weekend the new MLS system has now processed a large number of the pending listings that we saw two days ago and converted many of them into sales that closed at the end of July. The result is that July is now showing a total of 5,753 sales for all types and areas. The sales count for June was 5,729.

It is unusual for July sales volumes to exceed June, and this is the first time it has happened since 2003. It reinforces our view that market activity is strengthening even though pricing is still very weak. In fact the other very noticeable conclusion from July's numbers was that prices fell very steeply. The median monthly sales price declined by 5% from $200,000 to $190,000 while the average price per sq ft also declined by 5% from $129.95 to $123.63. These lower prices, associated with the large number of lender-owner properties among the sales, are likely to have been a key driver of the strong sales figures.

The average price per sq ft for pending listings did not fall as steeply during July, and this suggests that sales prices will not fall quite as far and fast in August as they did in July.

Pending Sales Growth

As of August 1, there are 7.729 sales marked pending. but only 4,583 shown as closed during July. The first number is very high and the second is low. Relatively few sales were closed in the last week of July.

Several possible reasons exist for the unusual situation.

1. Agents are not yet fully familiar with the new flexMLS system that was introduced on July 28, and some are taking longer than usual to update the status of their listings from pending to closed.
2. The initial performance and connectivity problems associated with the introduction of the new MLS system have prevented agents from recording some closings.
3. Contracts are taking longer to close due to the more stringent rules being applied by lenders for approval of financing.
4. Increased buyer activity in the outlying subdivisions where there are many bank-owned properties that are almost new.

Possibly we have a combination of all four.

In any case, the first two reasons (if true) will cause a delay in obtaining a true picture of monthly activity for July, so we are postponing the publication of our July monthly charts for one week to allow additional sales transactions to be reported. Weekly and daily charts will be updated as normal since any additional transactions will be quickly reflected in them.

Pricing Update

On June 18 we forecast that average sales $/SF would fall to the range $124.26 to $129.34 with a 92% confidence. Our midpoint prediction was $126.80. This was another test of the technique for predicting future sales prices based on current pending $/SF.

As of July 18, the average $/SF for monthly sales across all areas and types is $127.32, down just over 3% from $131.34 on June 18. Note that the latter figure has been adjusted slightly since June 18 due to additions and changes to ARMLS recorded sales data since then. The actual figure is within 0.4% of our midpoint prediction and well within the predicted range. This again seems to validate that we can predict future sales pricing over the short term - looking out some 30 days for a reasonably large market.

Having been accurate for three months now, we will continue to make specific forecasts for average $/SF pricing one month into the future.

Today the pending listings for all areas & types show an average list $/SF of $128.19. This is very low considering the average list $/SF for homes sold in the last month is $133.20, some 4% higher. This can be seen clearly on the list price per square foot chart.

We therefore see average sales $/SF over the next month continuing to fall, and somewhat faster than in the past month. Our mid-point forecast for August 17 is currently $121.43, and we have a 92% confidence that it will fall within ± 2% of this mid point, i.e. in the range $119.00 to $123.86. The confidence level for ±3% is 98% and for ±4% is 99.5%.

The implication is that overall average sales $/SF is expected to fall in the next month by about 4.6%.

Around August 17 we will check the accuracy of this projection and report back again.

Market Summary

As the market is behaving quite differently in different areas and price sectors, I thought it might be useful to give a concise summary of what we are observing:

1. Sales volume was slightly higher in June than May, but is falling back a little in July, which is a normal seasonal pattern.
2. The volume of pending sales is much higher than at the same time in 2007 suggesting relatively strong sales volumes in the near term, especially compared with the second half of 2007, which was extremely weak.
3. Sales volumes are strongest in the outlying cities. Weakest areas for sales volume are Tempe, Scottsdale, Fountain Hills and Paradise Valley. Strongest areas are Queen Creek, Maricopa (city), Surprise, Tolleson, Avondale, Goodyear, Anthem and El Mirage.
4. Inventory is declining but fairly slowly.
5. Foreclosures are still adding large number of REOs to the inventory.
6. Pricing is currently falling by an overall average of 3-5% per month, though at very different rates for different communities.
7. The average $/SF is now standing at the same level as in November 2004.
8. The median sales price is at the March 2005 level.
9. The 5 month difference between the above two is caused by the 11% increase in average re-sold home size between 3/05 and 7/08.
10. Pricing is strongest in luxury homes over $1.5m, but sales volume continues to fall to very low levels in these neighborhoods. Examples:
    1. Paradise Valley (5% below peak annual $/SF - monthly $/SF is not very useful due to high volatility and small sales volume)
    2. Fountain Hills (4% below peak annual $/SF - ditto)
    3. North Scottsdale (e.g. ZIP 85255 is 9% below peak annual $/SF)
    4. Arcadia (ZIP 85018 is 11% below peak annual $/SF)
11. Pricing is weakest at the bottom of the market - for homes priced under $200k annual depreciation averages over 30%.
12. Some areas have now dropped more than 50% from the peak monthly $/SF pricing. Notable examples are:
    1. West Phoenix / Maryvale (ZIP 85031 is 52% below peak, 85033 down 51%, 85035 down 57%, 85037 down 51%)
    2. Maricopa city (54% below peak)
    3. Queen Creek (52% below peak)
    4. El Mirage (53% below peak)
    5. Buckeye (52% below peak)
13. It is clear that the low pricing is attracting a larger number of buyers. Even West Phoenix, which was extremely slow in February, is now seeing volumes start to recover.
14. Queen Creek and Maricopa (city) homes have been selling in very high volumes since late March, though sales and pending sales have now started to decline a little from these record levels.
15. Queen Creek is currently the third largest city by monthly re-sale volume, more active than Scottsdale, Gilbert or Chandler, and nearly as busy as Mesa.
16. Maricopa (city) has been so active it currently has higher monthly re-sale volumes than Tempe, Avondale or Goodyear.

A Negative Signal for Pricing

Sales price per square foot (all areas & types) has been fairly stable over the last two weeks at around $130 to $131. At first sight, this seems to be an encouraging development. However we are once again seeing a very ominous sign - the list $/SF for pending listings has dropped from $133 to $129 in the same two weeks. It now stands below the list price $/SF for monthly sales and this is almost always a precursor of a sharp decline in sales pricing over the following month. Our outlook for the monthly average $/SF on August 9 is now around $124, a decline of 4 to 5% from the current level. This is a similar rate of decline to what we experienced in May.

On a brighter note, the increase we saw in active listings in the latter half of June has shown no sign of continuing into July, and we see a resumption of the previous trend - a slow reduction in inventory which in time will help stabilize the market.

June's Sales Exceed May

June's preliminary sales figure (all areas and types) was 5,735 with a median sales price of $200,000, average sales price of $264,208 and average sales $/SF of $129.78.

The equivalent figures for May were 5,630, $208,995, $270.839 and $134.42. So sales volume was up about 2%, median sales pricing was down by 4.3%, average sales pricing down by about 2.5% and average sales $/SF pricing down by about 3.5%.

Junes sales total is the highest for any month so far this year, as well as higher than June 2007, both of which are healthy signs of a recovery in market activity. However sales pricing continues to fall quite steeply and has so far shown no sign of stabilization. The average $/SF for sales pending is currently $131.16 which suggests average pricing is likely to continue to fall by an additional 2% to 5% during July.

Note that all these figures are "fresh" from the ARMLS data and therefore subject to minor change as recorded information is updated, added and.or deleted. However it is unlikely that further changes will be substantial, as the vast majority of the relevant information has already been entered by the agents involved in the tran

Active Listings Rising Again

Between March 28 and June 16 we saw a clear downward trend in the overall number of active listings from around 57,700 to around 54,200. However the trend seems to have reversed in the last week and we are now seeing a slight up tick in the overall active listing count to over 54,700. This effect is concentrated in the following cities - Avondale, Buckeye, Casa Grande, El Mirage, Goodyear, Paradise Valley, Phoenix, Queen Creek, Tempe and Tolleson.

Perhaps the increase in market activity has tempted more sellers back into the market. We suggest that you watch this short term change closely to see if it continues or is just a temporary blip in a longer term downward pattern. We expect to see a sharp drop on July 1 as listings expire at the end of the month, but this is the usual end-of-month and end-of-quarter effect. The important period to watch is the trend during first two weeks of July.

For the overall market see the daily active listing chart and for individual cities see the weekly active listing chart by city.

Pricing Update

On May 11 we forecast that average sales $/SF would fall by between 4% and 8% over the following 3 to 8 weeks. This was another test of the technique for predicting future sales prices based on current pending $/SF.

As of May 18, the average $/SF for monthly sales across all areas and types is $130.52, down from $137.38 on May 11. Note that the latter figure has been adjusted slightly since May 11 due to additions and changes to ARMLS recorded sales data since then. The change in $/SF is a fall of 5% in 5 weeks, so this falls within our predicted range. This again seems to validate that we can predict future sales pricing over the short term - looking out some 3 to 8 weeks, and for a reasonably large market.

After two months success, we are going to stick our necks out further and make a much more specific forecast.

Today the pending listings for all areas & types show an average list $/SF of $134.41. This is still low considering the average list $/SF for homes sold in the last month is $136.97, some 2% higher. This can be seen clearly on the list price per square foot chart.

We see prices over the next month continuing to fall, but not as steeply as in the past three months. Our mid-point forecast for July 18 is currently $126.80, and we have a 92% confidence that it will fall within ± 2% of this mid point, i.e. in the range $124.26 to $129.34. The confidence level for ±3% is 98% and for ±4% is 99.5%.

The implication is that overall average sales $/SF is expected to fall in the next month by about 3%.

Around July 18 we will check the accuracy of this projection and report back again.

Strong Sales Volume Growth in Many Cities

We are now seeing very strong monthly sales figures from a number of cities, with five cities setting all-time sales records for June.

You can see full details in the Sales per Month Chart by City, but here are the current rankings:

Tier 1: Higher sales per month than in any previous June: Buckeye, Casa Grande, Maricopa, Queen Creek and Tolleson.

Tier 2: Higher June sales per month than in 4 of the 5 years since 2003: Florence, Goodyear, Laveen, Waddell and Wittmann.

Tier 3: Higher June sales per month than in 3 of the 5 years since 2003: Anthem, Avondale, Gold Canyon, Litchfield Park and Surprise.

Tier 5: Higher June sales per month than in 2 of the 5 years since 2003: El Mirage, Eloy, Rio Verde, Sun City West and Youngtown.

Tier 6: Higher June sales per month than in 1 of the 5 year since 2003: Apache Junction, Gilbert, New River, Peoria, Sun City and Wickenburg.

Missing out on these positive trends so far are: Arizona City, Carefree, Cave Creek, Chandler, Coolidge, Desert Hills, Fountain Hills, Glendale, Mesa, Paradise Valley, Phoenix, Scottsdale, Sun Lakes, Tempe and Tonopah. In these cities, sales volumes are still at their lowest June levels since 2003. Since this latter list contains most of the larger cities, the overall sales per month number is not very impressive. However this obscures the remarkable sales volume recovery in many of the outlying cities.

Particularly noteworthy is Queen Creek, where sales volumes approaching 400 homes per month now make it the third largest city in the valley for single family detached resales, overtaking Scottsdale, Gilbert, Chandler, Glendale, Surprise and Peoria. This dramatic rise is an increase of 160% over June 2007 and has mostly taken place since March 2008.

Active Listings Lower Than 2007

For the first time since August 17, 2005, the total number of active listings (all areas and types) is lower than on the same date the previous year. The detailed history of active listings can be seen in the Weekly Active Listings Chart.

See Good News for several other signs that the market is improving.

May Sales Exceed April

As predicted, total sales numbers for the valley for May were much higher than April. A total of 5,606 sales were recorded on ARMLS as closed in May, which is a 15% advance on the figure of 4,865 in April. The monthly sales rate has now recovered to a level similar to June 1 last year. With pending listings some 16% higher than last year, this progress seems set to continue through June at least.

The significant rise in sales is probably due in no small part to the extreme fall in average sales price per square foot over the last two months. The average for all areas and types has fallen 9.4% since April 1, from $147.60 to $133.78. This drop was anticipated because it was preceded by a steep decline in the pricing for pending listings. Pending listing pricing has seen a moderate fall over the last two weeks, suggesting that, although sales pricing will drop again during June, the rate of decline will slow from its recent pace.

The major increases in sales volume have been concentrated in the areas of the valley with annual $/SF depreciation running over 30%. These areas include Maricopa (sales up 186%, $/SF down 36%), Queen Creek (sales up 153%, $/SF down 35%), Buckeye (sales up 112%, $/SF down 31%), Tolleson (sales up 110%, $/SF down 30%), Litchfield Park (sales up 75%, $/SF down 32%), Goodyear (sales up 69%, $/SF down 31%), El Mirage (sales up 45%, $/SF down 41%). Two exceptions where sales volume is higher but pricing has not been so severely cut are Anthem (sales up 123%, $/SF down 20%) and Florence (sales up 79%, $/SF down 23%). All sales growth % figures above are year on year.

Specific ZIP codes with strong year on year sales growth include Buckeye 85396, Mesa 85210, Surprise 85388, Glendale 85305, Phoenix 85014, Tolleson 85353, Phoenix 85086 and Mesa 85203.

It is noticeable that many parts of West Phoenix (ZIP codes 85009, 85017, 85019, 85031, 85033, 85035, 85041, 85043, 85051) have also seen annual $/SF depreciation rates over 30% but so far no dramatic increase in MLS sales volumes has followed.

In contrast the luxury home areas of Scottsdale, Northeast Phoenix, Fountain Hills and Paradise Valley are generally showing sales volume declines year on year but relatively modest depreciation in $/SF. One exception is Scottsdale 85258 where monthly sales are up 36%. Another is Phoenix 85050 with a 21% increase in monthly sales.

Further information is available in the City Ranking and ZIP Code Ranking tables.

Stronger Sales in May

Total sales numbers for the valley are higher than April 2008 from May 12th onwards and now look almost certain to end the month with a respectable increase over April 2008. They are still slightly behind the volumes for 2007, but from the weekly sales chart we see that sales declined during the 2nd quarter of 2007 as the market weakened and it looks likely that the 2008 sales rate will overtake 2007 sometime in June.

This is reinforced by looking at the pending listing counts which have been consistently higher than 2007 since mid April.

Price Forecast Result - Success!

On April 10 we forecast that average sales $/SF would fall by between 5% and 10% over the following 3 to 8 weeks. This was a test of our ability to predict future sales prices based on current pending $/SF.

As of May 11, the average $/SF for monthly sales across all areas and types is $136.66, down from $147.15 on April 10. This is a fall of 7.1% in just over 4 weeks, so close to the center of our predicted range.

This seems to verify that we can predict future sales pricing over the short term - looking out some 3 to 8 weeks, and for a reasonably large market.

So how does the picture look today? The pending listings for all areas & types show an average list $/SF of $139.83. This is still low considering the average list $/SF for homes sold in the last month is $143.98, some 3% higher. This can be seen clearly on the list price per square foot chart.

While not quite so severe as the price fall in the last four weeks, the implication is that sales $/SF will continue to fall in the next 3 to 6 weeks by another 4% to 8%.

Around June 15 we will check the accuracy of this projection and report back again.

Prices Weaken but the Market Is Strengthening

There are many signs of an improving market today - see Good News for details.

However prices are falling fast - average price per square foot for monthly sales is down about 7.5% in the last 30 days alone and is forecast to fall further (at least 3% and probably over 5%) during the next 30 days. This is consistent with a recovering market. Pricing is one of the last things to change direction when other signals have already changed course.

In the second half of 2005 and first half of 2006 prices rose quite significantly while other market measures weakened dramatically.

We see the opposite effect happening today. Note however, that the recovery is not at all uniform across all geographies. See the analysis by city and ranking tables to find out which cities are showing the strongest and weakest signs of recovery.

April 26 - April Sales Exceed March

As of April 26, there were 3,485 total sales recorded in April. The same figure for March 26 was 2,950. Despite the extra day in March it looks increasingly likely that April sales will exceed March.

Increases from January to February, and from February to March, are of little significance since they happen every year in the Phoenix metro. However this increase from March to April is much stronger than in 2007, and indicates the market is expanding. However most of this expansion is at the outer fringes of the valley and the more central and up-scale locations are not showing the same effects.

April 18 - Average $/SF Drops 25% from Peak

The monthly average sales price per square foot for all areas and types is $142.35, down 25% from the peak level of $189.73 reached on May 31, 2006.

The monthly median price is $212,000 down 21.6% from the peak of $267,000 reached on June 16, 2006.

The monthly average price is $282,277 down 21.1% from the peak of $358,010 reached on June 21, 2006.

The $/SF figures have fallen furthest because average home size has grown nearly 9% from 1,821 sq ft to 1,983 since May 31, 2006.

The price movements are far from uniform across the valley. Some areas (e.g. the city of Maricopa, Queen Creek) have $/SF down over 50% from the peak, whereas others have seen far smaller decreases (e.g. Scottsdale down 13.1%, Tempe down 13.5%).

In most areas where prices have dropped a great deal, sales activity is now at a high level. However sales activity is weaker in areas where pricing is stronger.

April 17 - Stronger Demand Spreading to More Areas

The pending listing counts for several ZIP codes are showing vigorous growth in demand. Much of it appears to driven by investors snapping up low-priced foreclosed or short sale homes. In the ranking table for ZIP Codes we see the following at the top of the table:

1. ZIP code 85353 (Tolleson) up 96% year on year
2. ZIP code 85340 (Litchfield Park) up 56% year on year
3. ZIP code 85339 (Laveen) up 54% year on year
4. ZIP code 85218 (Gold Canyon) up 52% year on year
5. ZIP code 85212 (Southeast Mesa) up 45% year on year

It is certain that Maricopa and Queen Creek ZIP codes would have featured in the top five, but in July 2007 ZIP code boundaries in these cities were dramatically changed and it is not valid to make year on year comparisons for their ZIP codes until later this year.

It is notable that the highest pending listing counts can be found in

1. ZIP code 85242 (North & Central Queen Creek) - 258
2. ZIP code 85243 (South Queen Creek) - 162
3. ZIP code 85239 (West Maricopa) - 141
4. ZIP code 85086 (North Desert Hills & Anthem) - 133
5. ZIP code 85379 (South Surprise) - 13

April 15 - Pending Listings Up - First Annual Increase in 30 Months

The pending listing count for all areas & types was 6,805 on April 15, and was 6,799 on April 15, 2007. This is a significant signal.

It is the first time since October 3, 2005 that the count has been higher year on year. Sales per month are still down 23.8% year on year, so this suggests we are going to see increased sales per month over the coming two months. However, an alternative explanation is that listings may be spending considerably longer in escrow before closing.

Year on year increases in pending listings may be seen in Avondale, Gilbert, Goodyear, Queen Creek and Surprise. However the other major cities (Chandler, Glendale, Mesa, Peoria, Phoenix, Scottsdale and Tempe) are still showing a decline year on year.

So far in April, sales are slightly down (1,467) from March (1,595), but only modestly. What we are currently seeing is the continuation and strengthening of two clear trends that have developed over the last two months:

1. Large increases in pending listings in the more distant areas that have experienced large $/SF decreases (e.g. Maricopa, Surprise, Queen Creek, Anthem).
2. Considerable slowing in sales rates in more expensive areas that have seen less movement in $/SF (e.g. Scottsdale, Paradise Valley, Fountain Hills) and in the central areas (e.g. Phoenix, Tempe, Glendale, Mesa, Chandler)

While not as dramatic as the increases in pending listings, sales in several of the outlying cities are also up strongly. For example Queen Creek sales per month are up 76% year on year. Partly because so much of the sales action has shifted towards the lower $/SF cities, the overall average $/SF has come down sharply, dropping 4.5% since March 15.

April 11 - 22 Cities Now Show Improved Market Balance

The latest table of cities showing their Cromford Market Index™ shows that 22 of the 43 cities that we track have improved their balance between buyers and sellers since 2007. In many of these cases, there is now much more buyer interest than in April 2007, with much higher monthly sales volumes and improved pending listing counts over the same date in 2007. Supply still remains strong, so none of these cities has yet reached neutrality, though Maricopa is nearest with an index value of 95.8.

The leading examples are Maricopa (up 51.8, with pending listings up 153% and monthly sales up 96%), Queen Creek (up 34.5, with pending listings up 128% and monthly sales up 72%), Anthem (up 28.6, with pending listings up 66% and monthly sales up 47%), Tolleson (up 23.8, with pending listings up 80% and monthly sales up 116%), Wittman (up 22.1, with pending listings up 50% and monthly sales up 100%) and Surprise (up 22.0, with pending listings up 32% and monthly sales up 16%).

It is very noticeable that these improved market conditions are occurring in cities that have seen some of the largest falls in pricing. Much of the increased sales volume is in bank owned (REO) or short-sale properties, but it appears that buyers are there for bargain priced single detached homes.

It is important to note that approaching the market balance index value of 100 implies stabilized pricing, but not in the immediate future. In most situations, pricing tends to follow some 12 to 15 months behind the trend set by a leading indicator like the Cromford Market Index™.

Average Sales $/SF Expected to Fall Sharply in the Next Month

Can we forecast future sales prices?

Yes, we can. At least in the short term - looking out some 3 to 8 weeks, and for a large enough market.

This is possible because we already have pretty good information about which homes are likely to close escrow in the upcoming weeks - the listings that are currently pending. We also know the average list price $/SF for these pending listings and we know how sales price $/SF compares with list price $/SF (in fact there is very close correlation between these last two). Using this data we can derive a mathematical forecast for the likely average sales $/SF about thirty days in the future.

Currently the pending listings for all areas & types show an average list $/SF of $145.95. This is very low considering the average list $/SF for homes sold in the last month is $154.02, some 5.5% higher. In normal circumstances this position is reversed with pending listings $/SF typically about 5% higher than the list $/SF of homes sold that month. This current unusual situation can be seen clearly on the list price per square foot chart.

The implication is that sales $/SF will probably fall in the next 3 to 8 weeks by between 5% and 10%.

On May 11 we will check the accuracy of this projection and report back.

Phoenix Bucks National Trends

The National Association of Realtors announced yesterday that their seasonally adjusted index of pending sales for existing homes fell to 84.6 in February from January's upwardly revised reading of 86.2. See azcentral.com for the full story. This was a disappointment to industry watchers who had been expecting a small rise.

However pending listings in the Phoenix metro rose from 4,196 on January 31 to 5,160 on February 29. They rose again to 5,833 on March 31. April is starting off with a bang and on April 9 pending listings sit at 6,355. This is a startling 110% growth since January 1, 2008. Although today's count of 6,355 is about 6% less than the figure for April 9, 2007, the growth from January 1 to April 9 in 2007 was only 47%, so we are definitely seeing some strong signs of recovery here in parts of the valley.

It should be emphasized that this growth is far from uniform across the valley and is concentrated in certain areas. See the April 2 story below for more details about this.

The Associated Press story also suggests that "the Realtors report gives an early indication of how existing home sales are likely to fare for March, because of the typical lag of a month or two between when a buyer signs a home sales contract and the closing of the deal". Readers of the Cromford Report™ already know what sales were like in March and we can confirm that sales were up in March over February, as shown in the monthly sales chart. This is not surprising; sales are always much higher in March than February for the Phoenix metro. The same is NOT always true for April over March. In fact March was the high point for sales in 2007. It will be very revealing whether April sales numbers match or exceed March in 2008 and we will be sure to report the conclusion as soon as we know it, probably by the last week of April.

Market Surging in Beaten Down Areas

The pending listing counts improved throughout the first quarter, but it became clear that this improvement was not uniform across the Phoenix metro area. Some cities were dramatically up over 2007, while others were significantly down.

Looking deeper we can see the huge differences between cities:

Category 1 - Large increases in pending listings in 2008 over 2007

Anthem, Avondale, Maricopa, Queen Creek, Surprise

Category 2 - Smaller increases in pending listings in 2008 over 2007

Laveen, Gold Canyon, Goodyear, New River, Tolleson, Wittmann

Category 3 - Pending listings roughly similar in 2008 to 2007

Arizona City, El Mirage, Gilbert, Mesa, Litchfield Park, Sun City West

Category 4 - A reduction in pending listings in 2008 over 2007

Buckeye, Chandler, Coolidge, Desert Hills, Eloy, Florence, Glendale, Peoria, Phoenix, Sun City, Sun Lakes, Waddell, Wickenburg, Youngtown

Category 6 - Pending listings much lower in 2008 than 2007

Ahwatukee, Apache Junction, Carefree, Casa Grande, Cave Creek, Fountain Hills, Higley, Paradise Valley, Rio Verde, Scottsdale, Tempe

It is the category 1 cities that have suffered some of the steepest price declines in the last two years. However, their very positive pending listings numbers (and much improved sales numbers) suggest that the lower prices are attracting buyers in increasing numbers. The most prominent example is Maricopa, where pending listings are up 135% over 2007, monthly sales are up 115% and months supply has dropped from 24 to 9 between the end of March 2007 and today. Maricopa's Cromford Market Index is 88.4, the highest of any city in the valley and with average monthly $/SF around $75 it demonstrates that low pricing can have an invigorating effect on sales.

In contrast, the cities with the strongest $/SF performance over the last two years, such as Carefree, Fountain Hills, Paradise Valley and Scottsdale, are all suffering reduced demand as measured by fewer pending listings and falling sales numbers.

It is rare that we see such a large divergence in the market.

Dramatic Sales Price Fall in February

The average price per square foot for homes sold dropped sharply from $156.63 in January to $148.24 in February. That's a fall of 5.4% in a single month for the average across all areas and types. $/SF rose by similar amounts three years ago during the peak bubble months of early 2005, but we have not seen pricing fall so sharply before, except immediately following the sub-prime crisis in September 2007.

Our other measures of sales pricing show a similar picture. The monthly median sales price in January was $224,000, and this fell to $216,000 in February (down 3.3%). The average sales price in January was $313,259 and in February was $292,036 (down 6.78%).

But average list prices for active listings have not reacted. The average asking price per square foot for active listings was $205.41 on January 31 and $205.19 on February 29. The average on July 31 2007 was $205.61. So average list prices have stayed essentially flat since last summer while sales prices have fallen over 15.4% from $175.25 to $148.24 in the same period.

It is important to note that the average list price per square foot for the homes that sold in February was only $156.44, so clearly the homes that sold were priced competitively with the market.

This seemed to be an ominous indication that the majority of active listings are priced so far out of touch with their competition that they have little chance of attracting an offer. This is not a good position to be in at the start of the peak spring selling season.

So we decided to investigate further.

We looked separately at each price sector, and found for each price range that average list pricing was not dramatically out of line with sales pricing, generally lying some 5% to 17% above the average sales price $/SF for that sector. However when we take the average for the whole market we include homes from all price sectors. Below $200,000 list pricing per square foot is around $107 and this average list $/SF increases with price reaching a high of $668 for homes above $3,000,000. What has changed dramatically since mid-summer 2007 is the mix of active listings and the mix of sales:

1. The sales activity has shifted hard towards the lower price ranges, especially below $200,000. In July 2007, only 16% of sales were for properties listed under $200,000. By February 2008 that percentage had more than doubled to 36%. This drives the average sales $/SF down.
2. The number of active listings has fallen in all the price ranges between $200,000 and $800,000 by between 9% and 26% (with the biggest drop for the price range $250,000 to $275000). However active listings priced above $800,000 have increased as a percentage with the largest increases at the top of the price ranges. For example we see a 65% increase in listings priced between $2M and $3M. These additional expensive listings have a strong effect pushing up the average list $/SF for active listings.

The combined effect explains the huge gap that has opened up between average list $/SF and average sold $/SF. Since this gap does not appear as large when we look at the individual price bands, we are preparing new tables to show this. The first few Price Range snapshots have already been added to the snapshot menu.

We do have one further conclusion:

Activity at the low end of the market is starting to warm up, while the top end has developed a large overhang of supply.

Note that the statistics quoted above are taken from ARMLS data as of March 1, 2008 and will differ slightly on subsequent dates as new information is added or changed in ARMLS.

Activity Rising Where Prices Fell Hardest

Pricing has fallen quite sharply in the last six months in many areas. Today the average price per square foot for monthly sales across the valley stands at around $152, down nearly 20% from the peak level of nearly $190 reached in May 2006. However the pricing changes have been much larger in some cities than others.

In a few cities that experienced earlier and larger price declines we are now seeing improvements in sales volumes and rising numbers of pending listings. As expected, buyers tend to be more active in areas where pricing has reacted most swiftly to the market. For example, in Queen Creek pricing per square foot is down over 26% in the last year but the number of pending listings is up 4.3% and monthly sales are up 12% compared to the same month last year. The pricing decline for Queen Creek started in January 2006, well before pricing peaked in most other cities.

A smaller but more extreme example is the city of Maricopa, where monthly sales are up 51% and pending listings are up 7% compared to one year ago. It seems fair to suggest that the increased buying activity is related to the fact that pricing per square foot in the city of Maricopa has fallen a remarkable 50% since the peak reached in September 2005.

Many List Prices Still Unrealistic

On January 7 the average sales price per square foot for monthly sales (all areas & types) fell to $153.69, the lowest level since May 4, 2005. The same figure for January 7, 2006 was $182.64, showing that the average price per square foot has depreciated by a record 12.5% in 12 months. It has dropped 19.0% from the peak level of $189.73 reached on May 31, 2006.

Surprisingly, the average list price per square foot rate for active listings on January 7 rose to $205.70, which is a record 33.8% higher than the monthly average sales price per square foot.

It seems that many buyers still have very unrealistic expectations for the price at which their homes will sell in the current market.

Annual Sales Lower Than 2001

On December 17 the annual rate of sales fell to a new low of 55,157. This is below the level of 55,223 set on January 29 2001 which had until today established the record low for the new millennium. This figure is likely to drop still lower over the next few months.

Other records set on December 17 are:

Average days on market for active listings - record high of 141.

Average price per square foot for monthly sales - 16.7% below peak of May 31, 2006.

Average price per square foot for annual sales - 7.0% below peak of October 26, 2006.

Despite the above, the Cromford Market Index continues to rise from the extreme low level of 25.6 set on October 30, 2007. This indicates that even though the market is heavily weighted towards the buyer (at 27.5), it is no longer tending towards an even more unbalanced position. Since a similar "bounce" occurred in late 2006 and early 2007, it is too early to declare this a "market bottom", but it is one of the few positive signs we can read from today's statistics.

December Market Fading Slightly

November's residential resale market showed a few distinct signs of improvement over October, with the Cromford Market Index moving upwards having fallen relentlessly since March. Although the Cromford Market Index is still moving upwards, December shows a few signs that the bounce is weak and may be short lived. Pending listings and sales per month are both down and pricing is moving back lower having staged a recovery in October and November.

December 9 saw three new records being set, two of them with negative connotations. Average time on market for active listings reached a new high of 138. Annual average sales price per square foot dropped to 95.7% of its peak level, meaning that the annual $/SF is now 4.3% below the maximum of $183.61 reached on October 4, 2006. Annual average square foot reached a new high of 1,920, which compares with an average of 1,826 from 1/1/2001 onwards.

Monthly average sales price per square foot is still slightly above the low point of October 1, 2007, but is now 16.1% below the peak of $189.73 reached on May 31, 2006.

November Market Improves over October

On November 22, 2007, the number of pending listings stood at 4,113, which is 23 higher than October 22. The rate of sales per month stood at 3,595, some 399 higher than October 22. And for the first time in 2007, active listings fell month to month from 58,159 to 58,136.

The Cromford Market Index has also moved upwards from 25.7 to 26.1 between October 22 and November 22.

Pending Listings and Sales per Month Move Higher in November

On November 15, 2007, the number of pending listings stood at 4,243, some 190 higher than October 15. The rate of sales per month stood at 3,357, 131 higher than October 15.

These are not big changes but their importance stems from the fact that they are increases, confirming that the market has stabilized since the steep drop-off in August and September. The Cromford Market Index reinforces this conclusion, standing at 25.9, the same as on October 15, and moving slowly upwards from a low of 25.5 reached on October 30.

The improvement stems from two factors. First, the supply of additional active listings has slowed down (although the total remains close to the record high), Second, the level of demand has inched slightly up, having fallen each month since February 2007. This doesn't mean we have seen a big change in the market. But it does mean we have stopped the significant month by month deterioration that persisted from February through October this year.

Record Inventory and Days on Market

On November 7, a new record high was set for days inventory at 365 days. This is the first time this figure has equaled a full year. This is not so much due to an increase in active listings, but more due to the drop in the annual sales rate to 57,902, down over 2,000 in the last 4 weeks. At the same time the average time on market for active listings is at a record level of 130 days.

Despite this depressing news for sellers, the market has stabilized in November with the Cromford Market Index at 25.7, the same level as two weeks ago.

Pricing Up Nearly 4% in October

The average price per square foot for homes sold in October exceeded September's number by 3.8%. The average sale price was up 4.9%

The number of homes sold was very similar, up just 0.4%, but the dollar volume increased by 5.3%, indicating that the higher end of the market experienced a recovery from the drying up of the jumbo loan in late summer.

Monthly Sales Hit New Low

On October 29, 2007, the seven day rolling average for monthly sales across all areas and types was 3,264. This is the lowest figure recorded this millennium, 50% below average for the period 2001 to date and 68% below the peak sales rate of 10,205 per month which was hit on June 22, 2005. It is also 41.3% below the monthly sales rate for October 29, 2006, which is a new record for percentage annual sales decline.

A new record low was also set for lisa ting success rate (22.3%), and new record highs were set for days on market - active listings (130) and months supply based on monthly sales (17.8).

However there were also a couple of brighter spots. The number of pending listings at 4,078 was 7.5% higher than one month ago and monthly average sales price per square foot was 0.4% higher than September 29, 2007.

First Positive Signals

On October 23, 2007, we see the first positive signals for many months. For the overall market, the number of pending listings edged up from 4,159 to 4,161 over the prior month and the Cromford Market Index™ also increased slightly from 37.6 to 37.8 over the same period. It is a long time since these figures have shown an increase month over month.

With monthly average pricing per square foot also starting to move upwards from the sharp drop in late September, this is the first time in several months that we have seen anything but gloomy statistics. It would be wrong to read too much into these numbers, since monthly sales volume also set a new record decline of 40% over 2006 and the months supply numbers are still moving rapidly upwards. However even a light sprinkling of good news goes a long way in the current market.

Overall, we can state that the market has stabilized in October after a free-fall in August and September. We will be watching closely to see if this is just a pause in the move downward or the start of a market recovery.

Record Drop in Monthly Sales

On October 20, 2007, the seven day rolling average for monthly sales stood at 3,409. This compares with 5,581 on October 20, 2006. The decline of 38.9% is the largest year to year percentage fall ever recorded. With active listings standing at 58,255 we also see a new record set for months supply (based on monthly sales) of 17.1 months.

Active Listings Exceed 58,000 for the First Time

On October 19, 2007, the total number of active listings on ARMLS exceeded 58,000 for the first time. With the luxury market outperforming the low end over the previous 30 days, the average size of homes sold in the last month also hit a new record of 1,986.

Market Slowdown Continues - Five New Records Set Today

Pricing for the first half of October has stabilized since the steep fall in September. However, volumes continue to decline and there is still no sign of the market reaching a bottom. New records were set on October 15, 2005 for:

Average Days on Market - Active Listings - record high - 128

Average Sales Price Percentage of List Price - record low - 95.56%

Months Supply Based on Monthly Sales - record high - 16.6

Listing Success Rate - record low - 25.1%

Cromford Demand Index - record low - 66.8

Average Pricing Drops 9.4% in September

An unprecedented and dramatic decline in pricing occurred during September 2007. The average price per square foot across all areas and types fell 9.4% from $174.18 per square foot to $157.18 per square foot. The average price dropped even further from $342,613 to $305,117 since average home size also fell slightly from 1,967 square feet to 1,933 square feet. This is by far the steepest monthly price decline in recent history.

In contrast, list pricing for active listings actually increased over the same period from $202.86 per square foot to $203.82 per square foot. Active listings on October 1 are now showing a very high 29.1% premium over the price of homes sold in the most recent month (September).

A large number of listings expired at the end of September causing a sharp drop in the number of active listings and causing a new record low listing success rate of 26.3%.

For the First Time - More Listings Expire Than Are Sold

On September 26, 2007, the 7 day rolling average for monthly sales was 3,842 among all areas and types. For the same monthly period ending September 26, 3,877 listings expired and 5,667 listings were canceled. This is the first time that expired listings have exceeded sold listings. Canceled listings have exceeded sold listings since June 25. This unusual situation is a result of the record number of active listings and a falling demand level, 41% below the average monthly sales for 2001-2007.

15 Months Supply

On September 25, for the total market (all areas and types) there is now a 15 month supply of active listings, a new record high. The recent increase in this figure is primarily due to the sharp drop in the monthly sales rate, although active listings have also been rising.

Other records set today are:

Days on Market - Active - record high of 126

Listing Success Rate - record low of 27.9%

12 Month Appreciation - record low of -7.8%

Moody's Forecasts 17.8% Decline for Phoenix Metro Pricing

According to an analysis by Moody's Economy.com, the housing market in the Phoenix / Mesa / Scottsdale are will decline by 17.8% in price between the peak of 2Q 2006 and their forecast bottom in 2Q 2008. This is based on the median home price, a statistic which the Cromford Report finds less useful due to the changing mix and sizes of homes for sale.

The average sales price per square foot during 2Q 2006 was $188.16, peaking at $189.73 on May 31, 2006. Today's average is $166.21, so we have already seen a decline of 11.7% between 2Q 2006 and September 21, 2007, based on sales price per square foot, the statistic we prefer to use. Moody's forecast implies a price per square foot of $154.66 during 2Q 2008. This represents a further decline of about 7% from today's level.

It will be interesting to see how accurate the Moody's forecast turns out to be.

Meanwhile new records were set on September 21 for

Active Listings - record high - 57,630

Days Inventory Based on Annual Sales - Active - record high - 342

Months Supply Based on Monthly Sales - record high - 14.8

12 Month Appreciation - record low - -6.7%

Pricing Drops Below $170 per Square Foot for the First Time Since August 2005

The average price per square foot for resale residential homes in all Phoenix Metro areas and of all residence types was $168.47 as of September 15, 2007.

This is the first time this pricing has been below $170 since August 9, 2005. As recently as May 28, 2007, the figure was $184.77, so this represents a drop of 8.8% in just 110 days.

New records were also set on September 15 for

Active Listings - record high - 57,341

Days Inventory Based on Annual Sales - Active - record high - 337

Months Supply Based on Monthly Sales - record high - 14.4

Cromford Market Index™ - record low - 37.4

Cromford Demand Index™ - record low - 68.6

Record Levels of Expired and Canceled Listings

Active listings are being canceled or expiring at an unprecedented rate, yet the the total number of active listings continues to grow. This implies that the excess in supply has still not peaked and the market still has further to go before turning around. The following new records were set on September 11 for statistics that include all types and areas.

Active Listings - record high - 57,159

Days on Market - Active - record high - 123

Days Inventory Based on Annual Sales - record high - 336

Months Supply Based on Monthly Sales - record high - 14.2

Listing Success Rate - record low - 29.3%

Phoenix Sales Drop Much Larger than National Forecast

The National Association of Realtors recently revised its prediction for total US home sales to about 5.9 million for 2007, down from 6.5 million in 2006, forecasting a drop of 8.6%. However, the level of annual sales for re-sale residential homes in the Phoenix metro area as of September 11 is 62,197. The number as of one year ago was 82,173. So the annual decline in sales is currently running at 24.3%. The drop has been increasing in recent months - monthly sales are down 31.6% as of September 11.

We can thus see that local sales volume has dropped much further than the forecast for the national market.

Active Listings Still on the March

The number of active listings has been generally increasing since early January, having taken a breather in November and December 2006. However, the increase has not been continuous. There is always a period at the beginning of each month when a large number of listings expire and the number of active listings goes down as a result. One measure of how fast listings are increasing is to watch the date on which a new high is made over the previous month's maximum. For the last 6 months these have been: April 5th, May 11th, June 20th, July 18th, August 9th and September 8th. So the rate of growth slowed during June and July but started to accelerate again in August and is stronger still in September, though not quite as strong as the in first four months of 2007. This means we can reasonably forecast reaching the 58,000 level before the end of September. It goes without saying that this would be a new record high, since today's 56,989 is already a record high.

Weak Demand Drives Market to Five New Records

Problems for sub-prime lenders are exacerbating weakness in the demand for lower-priced homes. The marked drop in sales volume is driving inventory measurements to new extremes. The following new records were set on September 7 for the statistics that include all types and areas.

Days Inventory Based on Annual Sales - record high - 332

Months Supply Based on Monthly Sales - record high - 13.8

Average Sale Price % List. - record low - 95.76%

Cromford Market Index™ - record low - 38.0

Cromford Demand Index™ - record low - 70.1

Pricing Drops Sharply in August

The average price per square foot for homes (all types & areas) sold during the monthly period ending September 2 was $173.00. This compares with $176.64 one month earlier. There was a similar sharp drop in the same period on 2006, from $181.91 to $176.39. We see a tendency for prices to remain firm during the traditionally busy spring and early summer, with a drop off that occurs in August in both years.

Pending Listings Collapse

The difficult mortgage environment is clearly weakening the already low demand for housing. Nowhere is this more evident than in the number of pending listings. As of September 1, 2007 the total number of pending listings for all areas and types was only 4,025. This is 16% below last month, 32% below last year and a staggering 59% below September 1, 2005. As a result the Cromford Market Index™ reached a new record low - 38.4 and the Cromford Demand Index™ also recorded a record low of 71.0

Weak Demand Drives Market to Five New Records

Problems for sub-prime lenders are exacerbating weakness in the demand for lower-priced homes. This weakness is having several effects. Sales volumes are not so weak in more expensive homes so the average size of homes sold in the last month is reaching new highs. Also the marked drop in sales volume is driving inventory statistics to new extremes. The following new records were set on August 31 for all types and areas.

Days Inventory Based on Annual Sales - record high - 330

Months Supply Based on Monthly Sales - record high - 13.4

Average Sold Home sq. ft. - record high - 1,972

Cromford Market Index™ - record low - 38.9

Cromford Demand Index™ - record low - 71.9

Four New Records Broken Today

A marked drop in monthly sales is driving statistics to new extremes. The following new records were set on August 28 for all types and areas.

Active Listings - record high - 56,773

Months Supply based on monthly sales - record high - 13.2

Listing Success Rate - record low - 30.1%

Cromford Demand Index™ - record low - 72.0

Another Six New Records Broken Today

Three strong trends in the market continue to break records in statistics for the overall market (all types & areas). These are: falling demand, growth in supply and the luxury sector of the market holding up much better than the rest of the market. When the mix of houses sold includes a smaller proportion of low-priced homes, the average and median price will tend to increase . This is shown clearly this month since the sales statistics include one home sold for $15,900,000 at list price. Sales of luxury homes like this push the average and median sales prices to higher levels, even though pricing per square foot is coming down across the rest of the market.

The following new records were set on August 24.

Active Listings - record high - 56,617

Days Inventory based on annual sales - record high - 325

Months Supply based on monthly sales - record high - 12.9

Average sold home square feet - record high - 1,970

Cromford Market Index™ - record low - 39.5

Cromford Demand Index™ - record low - 72.7

Another Eight New Records Broken Today

There are three three trends in the market causing records to be broken in statistics for the overall market (all types & areas). Demand is weakening, active listings are growing and the lower end of the market is deteriorating much faster than the high end. This latter effect tends to make average prices and median prices (often quoted in the media) extremely misleading. When the mix of houses sold includes a smaller proportion of low-priced homes, the average and median price will tend to increase, even though actual pricing is coming down. The following new records were set on August 22.

Active Listings - record high - 56,374

Days on Market - Active - record high - 120

Days Inventory based on annual sales - record high - 323.7

Months Supply based on monthly sales - record high - 12.6

Average sold home square feet - record high - 1,967

Average Sales Price % List - record low - 95.75%

Listing Success Rate - record low - 31.49%

Cromford Market Index™ - record low - 39.76

Eight New Records Broken Today

The unusual nature of the current market is underscored by the number of extremes in statistics for the overall market (all types & areas). The following new records were set on August 21.

Active Listings - record high - 56,305

Days on Market - Sold - record high - 115

Months Supply based on monthly sales - record high - 12.5

Average sold home square feet - record high - 1,963

Average Sales Price % List - record low - 95.78%

Listing Success Rate - record low - 31.5%

Cromford Market Index™ - record low - 39.765

Cromford Demand Index™ - record low - 73.0

Six New Records Broken Again Today

The same records for the overall market (all types & areas) that were set yesterday and the day before were broken again on August 20.

In particular the Cromford Marlet Index™ fell below 40 for the first time ever.

New highs were set for active listings (56,303), days inventory based on annual sales (323.6) and months supply based on monthly sales (12.5). We also see new lows set for average sale price as a percentage of list (95.86%), the Cromford Demand Index™ (73.3) and the Cromford Market Index™ (39.9).

Six New Records Broken Again Today

The same records that were set yesterday were broken again on August 19.

New highs were set for active listings (56,298), days inventory based on annual sales (324) and months supply based on monthly sales (12.4). We also see new lows set for average sale price as a percentage of list (95.89%), the Cromford Demand Index™ (73.5) and the Cromford Market Index™ (40.0).

The major change that is occuring in the market is not the increase in supply, although this is still growing. The most striking change is the drop in demand as expressed by monhtly sales and pending listings which are both falling to very low levels. The likely cause is the increasing difficulty that buyers now have in obtaining a suitable mortgage. At the lower end, stricter qualification rules for sub-prime mortgages are eliminating many buyers' ability to purchase. At the upper end, the sudden increase in interest rates for jumbo loans has reduced the buying power of even well-qualified purchasers.

Market Conditions Deteriorate Setting Six New Records Today

The number of new listings continues to grow while sales and pending listings are falling, and new records continue to be set in the overall statistics for all areas & types.

On August 18 new highs were set for active listings (56,205), days inventory based on annual sales (322) and months supply based on monthly sales (12.3). We also see new lows set for average sale price as a percentage of list (95.91%), the Cromford Demand Index™ (73.6) and the Cromford Market Index™ (40.0).

Four New Records Set Today

With a growing supply of new listings and sales and pending listings still falling, new records continue to be set in the overall statistics (for all areas & types). On August 17 we see new highs for active listings (56,016), days inventory based on annual sales (320) and months supply based on monthly sales (12.2). We also see a new low of 74.2 set for the Cromford Demand Index™.

Two New Records Set Today

The number of days on market for active listings (for all areas & types) hit a record high of 120 days on Augist 13. In addition the Cromford Demand Index hit a record low of 75.1.

Active Listings Top 56,000

For the first time active listings for all types & areas exceeded 56,000 on August 11, 2007.

Three New Records Set Today

With a steady supply of new listings and falling sales, new records continue to be set in the statistics for all areas & types. On August 9 we see new highs for active listings (55,670), days inventory based on annual sales (317) and days on market for sold listings (114).

12 Months Supply

There was a 12 month supply of residential re-sale properties (based on monthly sales for all areas and types) for the first time in history on August 4, 2007.

Pending Listings Falling

The number of pending listings has been dropping for some time and is now at a level well below those of 2001. On August 1 the number of pending listings for all areas and types was 4,771. Last year on this date the equivalent number was 6,063 and in 2005 it was 10,367.

Three New Records Set Again

The new highs were set on July 28, 2007, the second day in a row that new records were established for active listings (55,591), days inventory based on annual sales (313) and months supply based on monthly sales (11.1).

Records Setting Day

On July 27, 2007 new records have been set for active listings (55,487), days inventory based on annual sales (312) and months supply based on monthly sales (11.0).

Annual sales dropped below 65,000 for the first time since September 2002 and monthly sales volumes are currently below 2001 levels.

Average Sale Price per Square Foot Drops to Lowest Level Since August 2005

The average sales price per square foot for all types and areas fell to $174.06 on July 22, the lowest figure recorded since August 31, 2005. Average pricing was fairly firm until mid June but has fallen steeply over the last 4 weeks. Pricing is also firm at the very high end of the market (over $1,500,000) so this average reflects the weakness in the lower priced segments of the market.

More New Records Set for Active Listings and Days Inventory

Continuing the trend set the day before, July 21, 2007 set new records of 55,418 for active listings (all types & areas) and 310 for days inventory (all types & areas based on annual sales).

New Records Set for Active Listings and Days Inventory

With active listings still growing, particularly in the lower priced segment of the market, July 20, 2007 set new records of 55,349 for active listings (all types & areas) and 309 for days inventory (all types & areas based on annual sales).

High Priced Homes Appreciating While Low Price Active Listings Grow Fastest

There is a growing gap between the top and the bottom of the market

Referring to the Appreciation by Price Range chart (available to subscribers) we see that the average price per square foot for properties with list prices over $1,500,000 has increased by a healthy level of 8.5% or more. Below that price we see a very different picture with the greatest pain being felt by sellers of homes listed under $200,000.

Below $200,000 the average price per square foot has dropped by over 12% and active listings have more than doubled since January 2007. For the price range below $200,000 the average number of days on market for homes sold has increased from 70 to 91 and days inventory (based on annual sales) has more than doubled from 115 to 258. There is no doubt the tightening of the mortgage market has had a huge impact on this sector.

New Record Set for Active Listings

On July 18, 2007 a new high level of 55,175 was set for active listings (for all types and areas).

Inventory Makes Yet Another Record High

For the third day running, days inventory (based on annual sales for all types and areas) made a new record high, jumping to 308.

Although the number of listings continues to grow slowly, the main reason for the jump was the drop in the annual sales rate.

Inventory Makes Another Record High

A surge of new listings for the weekend brings another record high in the inventory level - 305 days (based on annual sales for all types and areas).

Inventory Makes New Record High

Although the rate of growth in active listings has slowed, it is still creeping upwards. In addition the annual rate of sales is still falling, as it has been since October 15, 2005. These factors combine to drive inventory to record highs. A new inventory level of 305 days was hit for the first time on July 13, 2007.

Demand Slowing in Early July

The rate of growth in the supply of re-sale homes has slowed. This is good news for sellers. See the Active Listings chart for more details.

However, demand has also slowed markedly, so overall the market balance has move further in favor of buyers. Recent sales volume, realized prices per square foot and the number of pending listings are all down month to month. Please see the Cromford Market Index chart for the net effect of these changes.

The charts mentioned above are available to subscribers only, but the Dashboard - All Areas & Types also gives a picture of recent trends and is available to all visitors to the site.

Appreciation Rates Show Major Disparity by List Price Range

Average appreciation rates for homes priced over $1,500,000 are positive, with the highest rate over 8% for homes over $3,000,000. Between $800,000 and $1,500,000, year on year pricing is close to flat. Below $800,000 appreciation rates are negative with the worst performing price ranges those below $225,000.

For more detail please refer to Annual Appreciation by Price Range (available to subscribers only).

Annual Sales Volume Drops Below 66,000

The annual number of sales (total for all areas & types) has been falling steadily since the peak of 106,895 reached on October 15, 2005. On July 1 the figure dropped below 66,000 for the first time since October 28, 2002.

Activity during the first quarter was running below 2003 levels but above volumes for 2001 & 2002. However in April it dropped below 2002 and in May below 2001. The current monthly rate is well below 2001 levels.

Normally sales volume increases during the second quarter and then falls back during the third quarter. In 2007 we have seen a slow but steady decline in volume during the second quarter, which is highly unusual.

Large Increase in Expired Listings

A larger than usual number of listings expired on June 30, and the number of active listings on July 1 fell by over 800. July 1. 3,578 listings expired in June while 5,513 were canceled. This brought the listing success rate down to 37.1%. A normal rate would be around 62%. This also creates a large pool of unsold homes for which there is no current listing, creating many opportunities for realtors who wish to sign up new clients

Active Listings Exceed 55,000

The number of active listings (all areas & types) made a new record high of 55,026 on June 29. As a consequence days inventory based on annual sales also equaled the record high of 303.

Active Listings Makes New All Time High

The number of active listings (all areas & types) made a new record high of 54,993 on June 27. We expect the 55,000 mark to be exceeded sometime today for the first time ever.

Sales Volumes Decline Further

The number of sales (total for all areas & types) has been dropping in May and June to levels lower than 6 years ago.

Activity during the first quarter was running below 2003 levels but above volumes for 2001 & 2002. However in April it dropped below 2002 and in May below 2001. The gap in June is still increasing, currently running about 800 sales per month below 2001 levels.

Normally sales volume increases during the second quarter and then falls back during the third quarter. In 2007 we have seen a slow but steady decline in volume during the second quarter, which is highly unusual.

Days Inventory & Active Listings Hit Another All Time High

The number of active listings made a new record high of 54,965 on June 24, and with annual sales at a level of 66,298, a figure not seen since November 2002, these factors combined to drive days inventory to a record high level of 303.

Active Listings Makes New All Time High

The number of active listings (all areas & types) made a new record high of 54,940 on June 23.

Days Inventory & Active Listings Hit New All Time High

Days Inventory Based on Annual Sales (all areas and types) hit another new high of 301 on June 22, 2007.

The number of active listings also made a new record high of 54,850 on June 22, and annual sales are at a depressed level of 66,597, a low level not seen since November 2002. These factors combined to drive days inventory to a record high level.

Sales volumes for May and June have been running at the lowest levels seen for these months since we started recording data in 2001.

New Record Set for Average Sales Price

Average Sale Price (all sales & types) hit a new high of $356,238 on June 21.

Record Setting Day!

The number of active listings (all areas & types) hit a new high level of 54,754 on June 20, surpassing the previous record set on May 27, 2007.

Days Inventory Based on Annual Sales (all areas and types) hit another new high of 300 on June 20.

The average liveable area square feet for monthly sales (all areas and types) set yet another new record of 1,952 on June 20, exceeding the record set one day earlier.

Average Sale Price (all sales & types) hit a new high of $355,648 on June 20. The previous record was set on June 15.

Average Square Feet Makes Yet Another New Record High

The average liveable area square feet for monthly sales (all areas and types) set yet another new record of 1,951 on June 19, 2007, exceeding the old record of 1,943 set on June 16.

Days Inventory Hits New High

Days Inventory Based on Annual Sales (all areas and types) hit another new high of 299 on June 17, 2007.

Although the number of active listings declined slightly to 54,612 on June 17, annual sales dropped to 66,578, a low level not seen since November 2002. These factors combined to drive days inventory to a record high level.

Sales volumes for May and June have been running at the lowest levels seen for these months since we started recording data in 2001.

Sales Volumes Fall Well Below 2001 Levels

At the beginning of 2007, sales volumes (total for all areas and types) were running below 2003 levels but well ahead of 2002 and 2001. Sales volumes fell below 2002 during the first week in April and have stayed well below ever since. They fell below 2001 levels in the third week of April and have tracked somewhat below 2001 since that date.

This week they have fallen well below 2001 levels. In most years, sales volumes increase between April and June. In 2007 they have declined between April and June. This is an unusual seasonal pattern and it shows clearly that the overall market is still slowing down. See the chart SVA2 for details (for subscribers only).

Average square feet also made a new record high of 1,943 on June 16.

Three New Records Set Today

Days inventory (all areas and types) hit a new high of 298 on June 15, 2007.

Average Sale Price hit a new high of $355,294 on June 15, 2007.

Average Sold Home Square Feet hit another new high of 1940 on June 15, 2007.

Although the rate of increase has slowed, the number of active listings continues to grow, reaching 54,572 on June 15, while annual sales remain at a depressed level of 66,925, a low level not seen since December 2002. These factors combined to drive days inventory to a record high level.

Larger homes currently comprise a higher than normal percentage of homes sold. This also tends to keep average sale price per square foot at a higher level, since luxury homes also sell for higher rates per square foot.

Days Inventory Hits New High

Days inventory (all areas and types) hit a new high of 297 on June 14, 2007.

Although the rate of increase has slowed, the number of active listings continues to grow, reaching 54,453 on June 14, while annual sales remain at a depressed level of 66,970, a low level not seen since December 2002. These factors combined to drive days inventory to a record high level

Average Square Feet Makes Yet Another New Record High

The average liveable area square feet for monthly sales (all areas and types) set yet another new record of 1,936 on June 13, 2007, exceeding the old record of 1,931 set just one day earlier.

Average Square Feet Makes Another New Record High

The average liveable area square feet (all areas and types) set a new record of 1,931 on June 12, 2007, exceeding the old record of 1,928 set just one day earlier.

Average Square Feet Makes New Record High

The average liveable area square feet (all areas and types) set a new record of 1,928 on June 11, 2007, exceeding the old record set two days earlier.

Larger homes currently comprise a higher than normal percentage of homes sold. This also tends to keep average sale price per square foot at a higher level, since luxury homes also sell for higher rates per square foot.

Days Inventory Hits New High

Days inventory (all areas and types) hit a new high of 296 on June 10, 2007.

Although the rate of increase has slowed, the number of active listings continues to grow, reaching 54,291 on June 10, while annual sales remain at a depressed level of 66,921, a low level not seen since December 2002. These factors combined to drive days inventory to a record high level.

Another New Record Set for Average Sales Price

The average price for monthly sales (all areas and types) set yet another new record high of $353,221 on June 8, 2007, exceeding the record set one day earlier.

Average square feet also set a new record high on June 9 at 1,927. These continuing record highs emphasize the relative strength of the upscale sector of the market compared with the weaker mid and lower price sectors. Price per square foot on June 8 was $183.49, some 3.3% below the record high of $189.73 set on May 31, 2006.