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Market Summary for the Beginning of April
Here are the basics – the ARMLS numbers for April 1, 2024 compared with April 1, 2023 for all areas & types:
- Active Listings: 17,025 versus 13,933 last year – up 22% – and up 2.8% from 16,568 last month
- Pending Listings: 5,371 versus 5,701 last year – down 9.1% – and down 3.5% from 5,371 last month
- Under Contract Listings (including Pending, CCBS & UCB): 8,601 versus 8,935 last year – down 3.7% – and down 1.1% from 8,693 last month
- Monthly Sales: 6,718 versus 7,598 last year – down 12% – but up 17% from 5,763 last month
- Monthly Average Sales Price per Sq. Ft.: $294.42 versus $277.59 last year – up 6.1% – and up 0.4% from $293.31 last month
- Monthly Median Sales Price: $445,000 versus $419,900 last year – up 6.0% – and up 1.1% from $440,000 last month
Supply continued to grow during March, which is very unusual for this time of year. However, it only grew 2.8% so did not exactly pile up and remains well below normal. Not too much extra competition for sellers and a welcome increase in available choice for buyers.
Demand remains low and the number of pending listings fell 3.5% from last month and stands over 9% below this time last year. Although the March closed listing count was up 17% from February, this is far less of an increase than we would see in a normal year and the monthly total is down as much as 12% from March 2023. Demand has been weak for a long time and is starting to show signs of falling further. The annual sales rate is now down to the lowest it has been since 2009. As we have pointed out many times, demand for new homes remains far stronger than for re-sales.
A one-word summary of the current state of the market would be insipid. Volumes are unusually low, but the market is stable and the level of distress remains close to record lows. There is also little sign of a significant change in the near term so those hoping for a major drop in prices are no doubt indulging in wishful thinking. We are heading slowly toward balanced market conditions so the prospect for a rapid rise in prices is also minimal.
Everyone is waiting to see if mortgage rates might fall and spark some buyer enthusiasm, but all forecasts of these rates have proven to be unreliable so far.
Closings over asking price have edged up seasonally to 17% of March sales so far, but the majority of sales are negotiated down by an average of 2.1% below list.
Builders have been ramping up new single family home permits over the past 7 months, up 32% since June 2023. Over the last 3 months, 73% of new home sales closed have involved builder incentives paid to the buyer, with at least 50% paying $11,500 or more. These incentives typically go towards buying down the mortgage rate and saving the buyer $100’s on their monthly payments.
Spring is statistically the best time to be a seller in Greater Phoenix as buyer activity closes in on its seasonal peak from April through May before slowing down from June through December. This season some areas and price points have been heating up more than others compared to last year, but heat is not all about demand because it’s difficult to increase sales without supply for sale.
For example, areas with the highest percentage increase in contracts over the past 2 months happen to be on the edges of the Valley, such as Black Canyon City, Carefree/Cave Creek, Rio Verde, Sun Lakes, Wittmann, El Mirage, and Avondale. However, with the exception of Avondale, none of these areas feel particularly hot to active sellers because there’s more competing inventory to accommodate the increase in demand.
When supply is taken into account, the hottest areas of Greater Phoenix where supply isn’t quite sufficient for Spring demand gravitate to the south. Namely Avondale, Tolleson, South Phoenix, Ahwatukee, Chandler, Gilbert, and San Tan Valley. While median prices in these areas are still flat, reasonably priced sellers are selling 1-2 weeks faster than the current 4-week median time frame.
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