Pending Sales 15.9% Below Prior Year Tax Credit Fueled Surge; 4.8% Below March Rush. Median Sales Price Essentially Unchanged Year-Over-Year
Rockville, MD –(May 10, 2011) – The following analysis of the Washington, D.C. Metro Area housing market has been prepared by housing market expert Jonathan Miller of Miller Samuel, based on the April 2011 RBI Pending Home Sales Index™ released today:
April buyers and sellers in the Washington, D.C. metro area signed 5,170 purchase contracts, the second highest April since 2006. The total was second only to the April 2010 surge in activity related to the final days of the federal homebuyer tax credit. Pending sales in April fell to 5,170, 4.8% short of the heavy volume reached in March, partly a result of last month’s release of pent-up demand accumulated during the post-tax credit expiration lull in the second half of 2010. The April 2011 median sales price was $334,000, nominally below $335,000 reached in same month last year and 4.4% above $320,000 in March. The month over month increase was consistent with seasonal patterns.
Pending sales fell short of last month’s level, but remain the fourth highest total in 45 months. There were 2,712 pending sales in April 2011, 21.8% less than the tax credit-fueled surge of 3,466 pending sales last year at this time and 5.1% below 2,857 pending sales in the prior month. April fell short of March’s jump in sales, largely caused by the release of pent-up demand built up from the lull in activity in the second half of 2010. Inflated sales activity before the expiration of the federal homebuyer tax credit program in April 2010 was made up of buyers incentivized to purchase before the deadline who otherwise would have “organically” purchased in the second half of 2010.
For the first time in 2011, median sales price increased month-over-month. The median sales price in April 2011 was $215,000, 7.5% above $200,000 in March. The month-over-month increase is considered seasonal and lags the improvement in pending sales activity by approximately 90 days. This was the first month-over-month increase since October and the fourth month-over-month increase in the past year. For perspective, the first four months of 2011 resulted in the four lowest monthly median sales prices for the region since January 2005.
Active inventory slipped as new inventory fell sharply. Active inventory slipped 1.5% to 16,732 in April 2011 from 16,995 in the same month last year but saw a seasonal increase of 3.9% from 16,108 in the prior month. Part of the decline in active inventory was the pronounced 20.6% year-over-year decline in new listings entering the market. While new inventory is expected to enter the market during the spring, new inventory growth fell 2.9% to 4,587 in April 2011 from 4,726 in March 2011. The slowdown in new inventory is expected to keep total inventory growth in check as pending sales activity continues to work off excess supply.
Days on market in April were two days faster than March but 22 days slower than one year ago. The average days on market was 133, more than three weeks slower than 111 days in the same month last year and down nominally from 135 in the prior month. The days on market metric is the average number of days from original listing date to contract date for all sales that closed in the month. The listing discount metric measures the percent difference in price between the original list price and the sales price and showed a similar pattern. At 11.1% in April 2011, buyers and sellers were further apart than the 8.5% listing discount during the tax credit-related pending sales surge last year at this time.
The monthly absorption rate edged higher as pending sales activity weakened. The monthly absorption rate was 6.2 months, slower than 4.9 months in the same month last year and slower than 5.6 months in the prior month. The monthly absorption rate is the number of months to sell all active inventory at the current pace of new pending sales. Active inventory was at a similar level compared to April 2010 so the increase was largely attributable to fewer pending sales in April 2011.
The RBI Pending Home Sales Index™ is a two-year moving window on the housing market using new pending sales and median sales price. It provides unique insight into the state of the current housing market by measuring the number of new pending sales for each month through the most recent month.The results include new pending sales through and including April 2011. The market area includes: Washington, D.C., Montgomery County, Prince George’s County, Alexandria City, Arlington County, Fairfax County, Fairfax City, and Falls Church City.
ABOUT JONATHAN MILLER/MILLER SAMUEL:
Miller is President and CEO of Miller Samuel Inc., a nationally known real estate appraisal and consulting firm. A well-regarded real estate commentator, who frequently appears in national media outlets including the Wall Street Journal, the New York Times, Bloomberg News and others covering national and regional housing issues and he has been named “Best Online Real Estate Expert" by Money Magazine. Miller’s stringent focus on neutrality has contributed to his recognition by Inman News as one of the most influential real estate bloggers in the U.S. More information on Mr. Miller and Miller Samuel can be found at www.millersamuel.com or follow him on Twitter @jonathanmiller.
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