With Prices Down, August Sales Jump Up

Thurston County August home sales posted the best year over year percentage gain in almost three years. Lower prices pushed the month’s homes sales up 12.2% over year ago figures (332 sales in 2009 vs. 296 sales in 2008).

This is only the fourth month out of the last 32 where a positive gain in sales has been posted. The other three months with sales gains were only slight percentage upticks. We have to look all the way back to December 2006 to find the last 12% gain in sales.

Price reductions have put affordability levels at the highest levels in decades. Add attractive interest rates and an $8,000 first-time buyer tax credit, and we have buyers coming back into the market.

Pending sales, which are an indicator of sales a month or two down the road, were up 5.9% year over year in August. That is a nice gain but off the big 14.7% jump experienced in July.

Our market will need a string of months like August if we are to get back to a truly balanced market. That is because inventory levels still place us squarely in a buyer’s market with just over a seven month supply of homes for sale.

Prices will continue to correct down until we are back in a balanced market, which has a four to six month supply of homes.

Thurston County’s year to date median price has fallen 6.5% from last year. It now stands at $243,000 compared to $259,900 last year.

Even with these price adjustments, the market as a whole is still above its historic trend line for price appreciation (see our July 28, 2009 post for more on prices). We expect prices will continue to moderate through the spring of next year and then start a slow recovery.

The big jump in home sales last month, however, is a clear reminder that each home has its own price bottom. Buyers are gobbling up the well-priced homes. The still overpriced homes are being ignored until prices are reduced (for more on this topic see our August 18, 2009 post).

More and more sellers understand the need to get the price right now. In July, 41% of sellers sold without needing a price reduction. Only 29% of sellers at the start of the year started with the right price. Buyers are starting to learn that if they wait for a “market” bottom they may just miss out on the home of their dreams that is already on its way back up.

Next week: Prices are starting to inch up around the country, why not here. Learn why our market will continue to lag behind the rest of the country as we come out of the housing slump.