Wisconsin sets winter record for home sales
Date: March 16, 2020
MADISON, Wis. – Wisconsin set a new winter home sales record with December through February sales topping 14,000 for the first time, according to an analysis of existing home sales by the Wisconsin REALTORS® Association (WRA). Although February sales were relatively flat, falling 0.9% over the past 12 months, robust sales for the previous two months averaged 13.9%, propelling sales for the winter season to a new record. Continued limited inventories pushed prices up more than three times the rate of inflation this winter, including the month of February during which median prices increased 8.6% to $190,000 over the February 2019. In contrast, the annual inflation rate stood at 2.3% in February according to the most recent consumer price data released by the U.S. Bureau of Labor Statistics. Nonetheless, affordability remains strong due primarily to a fall in mortgage rates.
“We hit this record even though inventories tightened to the point where every region of the state is now a seller’s market,” said WRA Chairman Steve Beers. Housing analysts view a market as balanced when there are six months of available supply. Wisconsin dropped to just 3.4 months of supply in February. “Supply was tightest in the more urban areas, but even rural areas slipped below 6 months of available inventory,” said Beers. The large metropolitan areas had just 2.9 month of available supply in February; followed by micropolitan areas, which have a population between 10,000 and just under 50,000 residents, which had 3.8 months of supply. The small, rural counties with under 10,000 people had 5.5 months of available inventory in February, down from 6.5 months a year earlier.
“Mortgage rates have fallen to near record levels, which is good for affordability,” said WRA President & CEO, Michael Theo. The 30-year fixed-rate mortgage stood at 3.47% in February, which is down from 4.37% a year ago. The all-time monthly low point was 3.35% in November and December of 2012. The Wisconsin Housing Affordability Index shows that fraction of the median-priced home that a typical buyer with median family income can afford to buy, assuming 20% down and the remaining balance financed with a 30-year fixed mortgage at current rates. The index was 226 in February 2020, up from 219 in February 2019. “Our housing was more affordable than the nation and Midwest region,” said Theo. The national index was 161.8 in December, and the Midwest index stood at 211.5 for that same month.
“While the economy has been on solid footing, we can’t ignore the elephant in the room, and that’s the economic turmoil created by the coronavirus,” said David Clark, Marquette University economist and consultant to the WRA. In a global economy, all economies are interconnected, and this pandemic has already created significant disruptions to supply chains. “The best-case scenario is that the impact of the coronavirus is short-lived, but the longer it persists, the greater will be the economic impact,” said Clark. Michael Theo noted that REALTORS® will continue to serve their clients during this tumultuous period. “The bottom line is affordability continues to improve as mortgage rates approach record-low levels, and a REALTOR® who is experienced can find buyers the most home for their budget,” he said.
Note that the WRA employs a slightly different protocol to determine inventory levels than the protocol used by the REALTORS® Association of South Central Wisconsin (RASCW). For consistency, the summary tables for the South Central region reported in the WRA release employ the WRA approach. However, a modified table employing the RASCW methodology is available from the WRA upon request.