Gary Walter and his colleagues may well break out the summer champagne this weekend after poring over the June housing numbers for Michigan’s Great Southwest. On virtually every front and in every measure June was a record-breaking month for the local housing market, as a stellar year continues to build momentum.
Walter says it was a record month for not only the number of houses sold, but also a record for total dollar volume and average selling price for the month so far this year-to-date.
As Walter, who serves as the Executive Vice President of the Southwestern Association of Realtors, Inc., says, “June did not disappoint area sellers.” He tells us, “The average and median selling prices in June and the year-to-date selling prices became the highest prices since 2006 when comparing results just for the month of June each year.”
Walter points out that, “While the number of houses sold in May reached 357, in June 348 houses were sold for just a 3-percent drop. However, the average selling price in June was 8-percent higher ($223,871 vs. $207,614) and the median selling price was 16-percent higher ($156,000 vs. $135,000).”
Six more houses were sold in June 2016 compared to June 2015 (348 vs. 342) for a 2-percent increase. Year-to-date, the number of houses sold was up 11-percent from June 2015 (1595 vs. 1440).
The total dollar volume for June was up 12-percent; reaching to $77,907,454 from $69,677,478 in June 2015. Year-to-date, the total dollar volume was up 14-percent ($310,108,424 vs. $271,308,555). The total dollar volume in June and the year-to-date were the second highest in the year-over-year comparison from 2006.
Climbing more than $20,000, the average selling price in June was $223,871 versus $203,735 in June 2015 for a 10-percent increase. Year-to-date, the average selling price was up 5-percent ($197,425 vs. $188,409).
Up 4-percent, the median selling price was $156,000 compared to $150,500 in June 2015. Also up 4-percent, the year-to-date median selling price was $135,000 versus $130,000 in June 2015.
The median price is the price at which 50% of the homes sold were above that price and 50% were below.
The housing inventory increased slightly from May by 103 houses. Still at the current selling pace at the end of June there was an 8.3-months supply of houses for sale. In June 2010 and 2011 there was a 16.9-months supply of houses for sale. At the end of June there were 2386 houses for sale compared to 2616 in June 2015.
The number of bank-owned or foreclosed homes as a percentage of all transactions in the market was 9-percent in June. That is the lowest percentage this year. The lowest percentage in 2015 was 9-percent. The highest percentage, in February 2009 was 75-percent.
Locally, the mortgage rate dropped to 3.65 from 3.73 in May. In June 2015, the rate was 4.18. Nationally, the Freddie Mac mortgage rate in June was 3.57 compared to 3.60 in May 2016.
According to the National Association of Realtors – Existing-home sales maintained their upward trajectory in June and increased for the fourth consecutive month with a boost from a greater share of sales to first-time buyers not seen in nearly four years. Only the Northeast saw a decline in closings in June, and sales to investors fell to their lowest overall share since July 2009.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, climbed 1.1-percent to a seasonally adjusted annual rate of 5.57 million in June from a downwardly revised 5.51 million in May. After last month’s gain, sales are now up 3.0-percent from June 2015 (5.41 million) and remain at their highest annual pace since February 2007 (5.79 million).
Lawrence Yun is Chief Economist for the National Association of Realtors. He says the impressive four month streak of sales gains through June caps off a solid first half of 2016 for the housing market. He says, “Existing sales rose again last month as more traditional buyers and fewer investors were able to close on a home despite many competitive areas with unrelenting supply and demand imbalances.” He adds, “Sustained job growth as well as this year’s descent in mortgage rates is undoubtedly driving the appetite for home purchases.”
Yun cautions however, “Looking ahead, it’s unclear if this current sales pace can further accelerate as record high stock prices, near-record low mortgage rates and solid job gains face off against a dearth of homes available for sale and lofty home prices that keep advancing.”
The median existing-home price for all housing types in June was $247,700, up 4.8-percent from June 2015 ($236,300). June’s price increase marks the 52nd consecutive month of year-over-year gains and surpasses May’s peak median sales price of $238,900.
Regionally, existing-home sales in the Midwest jumped 3.8-percent to an annual rate of 1.35 million in June, and are now 4.7-percent above June 2015. The median price in the Midwest was $199,900, up 5.7-percent from a year ago.
The share of first-time buyers was 33-percent in June, which is up from 30-percent in May and a year ago and is the highest since July 2012 (34-percent). Through the first six months of the year, first-time buyers have represented an average of 31-percent of buyers; they were 30-percent in all of 2015.
Yun says, “The modest bump in June sales to first-time buyers can be attributed to mortgage rates near all-time lows and perhaps a hopeful indication that more affordable, lower-priced homes are beginning to make their way onto the market.” He then adds, “The odds of closing on a home are definitely higher right now for first-time buyers living in metro areas with tamer price growth and greater entry-level supply — particularly areas in the Midwest and parts of the South.”
All-cash sales were 22-percent of transactions in June, unchanged from both May and a year ago. Individual investors, who account for many cash sales, purchased 11-percent of homes in June (lowest since July 2009 at 9-percent), down from 13-percent in May and 12-percent a year ago. Sixty-four-percent of investors paid cash in June.
Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida is President of the National Association of Realtors. He says Realtors are thrilled that the U.S. Senate last week unanimously voted to pass H.R. 3700, the Housing Opportunity Through Modernization Act. “At a time of historically low mortgage rates, this is a huge win for prospective first-time and low- to moderate-income buyers interested in purchasing a condo.” He suggests that “Eliminating overly burdensome restrictions on condos will help more of these prospective buyers access financing and take advantage of this affordable entry point into homeownership.”
Nationally, the total housing inventory at the end of June dipped 0.9-percent to 2.12 million existing homes available for sale, and is now 5.8-percent lower than a year ago (2.25 million). Unsold inventory is at a 4.6-month supply at the current sales pace, which is down from 4.7 months in May.
