Wisconsin Realtors Association: Growth in home sales and prices continues in August

For More Information Contact:

Michael Theo, WRA President & CEO, 608-241-2047, [email protected]

or David Clark, Economist, C3 Statistical Solutions and Professor of Economics, Marquette University, 414-803-6537, [email protected]

MADISON, Wis. – The Wisconsin housing market remained strong in August as home sales increased at a robust 20.3 percent pace over the same month last year, putting upward pressure on home prices, according to the most recent monthly report by the Wisconsin REALTORS® Association (WRA). Median prices rose 2.9 percent in August to $144,000 compared to August 2011, which is the sixth straight month of home price appreciation.

“National election cycles always introduce some degree of uncertainty in the economy, and this year is no exception, but the state housing economy continues to grow at a very solid pace,” said Renny Diedrich, chairman of the WRA board of directors. The home sale recovery began last summer, and sales have grown 20.7 percent year-to-date. “It’s great to see these sales so strong during the peak sales period in the state,” said Diedrich, who noted that in a typical year, about a third of Wisconsin closings take place between June and August. The strong August sales were seen throughout the state, with the North region up 36.0 percent over August of last year. “The North region is bouncing back after lagging the state in sales growth earlier this year,” said Diedrich. Also quite strong was the South Central region, which grew 23.1 percent over the period. The remaining four regions were more closely clustered, with sales up 18.7 percent in the West; growth of 17.7 percent in the Northeast and Southeast regions; and sales increasing 15.7 percent in the Central region in August 2012 compared to August 2011.

The median price rose at an annual pace of 2.9 percent in August 2012, and this continues the pattern of modest price appreciation statewide for each of the last six months. “It’s clear that in spite of slight upticks in the state unemployment rate over the last two months, the housing market continues to grow, and it’s growing at a brisk pace,” said WRA President and CEO Michael Theo. Statewide inventories stayed in the range of 60,000 to 62,000 units since April, and while this is well below the peak of over 72,000 unsold units recorded in August 2010, it remains relatively high. “We have over a year of available inventory, which is one of the things that has kept prices from rising more quickly given the strong growth in sales over the past 14 months,” said Theo. An analysis of county-level inventories suggests metropolitan counties have fewer homes for sale than the statewide average. “We are currently seeing an average of about 9.6 months of inventory for our metropolitan counties compared to an overall statewide average of 12.5 months, which means the urban markets are liquidating their inventories more rapidly” said Theo. Nonetheless, housing affordability remains high in the state. The Wisconsin Housing Affordability Index, which measures the percentage of a median-priced home that a buyer with the median family income can afford, changed by modest margins. The index was at 237 in August, which is down slightly from the July figure of 240, but up from the August 2011 level of 224. “The fact that 30-year fixed mortgage rates have been under 4 percent all year, and currently stand at 3.6 percent, has kept affordability high, even as home prices have inched upward,” said Theo. Theo suggested that while the Federal Reserve has signaled a commitment to low interest rates in the near term, continued home price appreciation will eventually reduce affordability. “This is an excellent time to work with a REALTOR® to lock in a mortgage at very favorable rates before home prices start rising more quickly,” he said.

The Wisconsin REALTORS® Association is one of the largest trade associations in the state, representing over 14,500 real estate brokers, sales people and affiliates statewide. All county figures on sales volume and median prices are compiled by the Wisconsin REALTORS® Association and are not seasonally adjusted. Median prices are only computed if the county recorded at least 10 home sales in the quarter. All data collected by Wisconsin REALTORS® Association are subject to revision if more complete data become available. Beginning in 2010, all historical sales volume and median price data at the county level have been re-benchmarked using the Techmark system which accesses MLS data directly and in real time. The Wisconsin Housing Affordability Index is updated monthly with the most recent data on median housing prices, mortgage rates, and estimated median family income data for Wisconsin.