July 2015 Market Report: Higher Home Prices Despite Seasonal Sales Dip?

July Market Report

By Breanna Vanstrom

Compared to June 2015, single-family home prices in Ada County for July 2015 were up, while pending and closed sales were down. To some these sales counts prompted questions of a slowdown—but a seasonal slowdown is quite different from a market slowdown. Based on the recent trends and comparing them to historical performance, we’re not seeing a market slowdown at this time. Let’s take a look…

Pending sales are a great metric to look at when trying to determine the direction the market is headed, as they are an indicator of future sales since the homes under contract will likely close within the next 30-60 days. So while there may have been a seasonal dip in pending sales of 2.9 percent from June to July, looking year-over-year, pending sales were 33.5 percent higher than the same time last year. There were similar trends for closed sales, too.

Yet after last month’s market report, showing peaks in prices and closed sales for Ada County, it’s easy to wonder whether we’re at the top of the market, or leaning toward a downturn.

Brenda Kolsen, president of the Ada County Association of REALTORS, responds, “As noted in our mid-year market report, our area typically sees a slight drop in activity each year in July or August, after the rush of the spring market, and as people take summer vacations and get ready for the new school year. Then we usually have another pop of activity in the fall. I expect we’ll see the same this year if economic conditions persist, and based on the number of inquiries our REALTOR members are fielding every day, from people looking to buy and sell.”

The question of a market peak – or even another housing bubble – is also being asked nationally. Based on the economic trends tracked by the National Association of REALTORS (NAR), that’s not likely.

At an industry event held in Chicago, NAR’s chief economist Lawrence Yun explained that the national market is very different today than it was during the peak in 2005 or 2006. Most notably because of the changes in credit/lending standards and housing inventory levels over the past few years. Mortgage lenders now follow strict rules to qualify potential homebuyers, and many of the creative loan programs that were available back then are no longer in use. This has helped to diminish the risk of buyers getting into loans beyond their financial means. Paired with improving jobs numbers, we’re in a much better situation today, both financially and economically.

Additionally, the supply of homes nationwide is well below consumer demand, which is fueling the rise in prices. Locally, we’re definitely seeing the same thing, with housing supply at 2.5 months in July 2015 for all single-family inventory throughout Ada County. (A balanced market – not favoring buyers or sellers – is typically between 4-6 months of supply.)

“We will continue to watch local trends, especially pending sales and prices, to identify any irregularities that may emerge outside of our usual, seasonal peaks and valleys,” said Kolsen.

Here’s how the rest of July 2015 shaped up for single-family homes in Ada County:

  • Closed sales were at 1,007, up 20.3% year-over-year, and up 19.2% year-to-date.
  • Median sales price was at $232,500, up 8.4% year-over-year, and up 7.8% year-to-date.
  • Months of inventory was at 2.5 months, down 30.6% year-over-year (not tracked YTD).
  • Days on market was 42 days, down 8.7% year-over-year, and down 5.5% year-to-date.

The information in this market report is based on a variety of sources, but primarily on the public statistics provided by the Intermountain MLS (IMLS), a subsidiary of the Ada County Association of REALTORS.