Wisconsin Existing Home Market Remains Solid in October
Date: November 18, 2019
MADISON, Wis. — The fourth quarter opened with slight growth in home sales, even as median prices increased at a robust pace, according to the most recent review of the state housing market by the Wisconsin REALTORS® Association (WRA). Closed sales of existing homes increased 0.7 percent comparing sales in October 2019 with October 2018, and the median price rose 7.3 percent to $195,900 over that same period. Comparing the first 10 months of 2019 to that same period last year reveals that home sales were down just 1.5 percent whereas median prices rose 7.1 percent to $198,000 over the period.
“In contrast to last month where the growth in home sales was solid in every region of the state, the sales picture in October was quite mixed,” said WRA Chairman Steve Beers. Four regions saw sales grow over the last 12 months, with the Southeast and Central regions up 5.7 percent and 5.2 percent, respectively. The West region grew 3.7 percent, and the Northeast region increased 3.0 percent between October 2018 and October 2019. In contrast, the North region fell 6 percent, and the South-Central region dropped 9.6 percent over that same period.
“Inventory weakness continues to be the main driver in this market, with nearly every part of the state considered a seller’s market,” said Beers. Only the North region had more than six months of available supply. Moreover, the inventory situation failed to improve in any region of the state over the past year. Overall, there were just 4.6 months of statewide supply, dropping slightly from the 4.7 months of supply in October of last year. The weakest inventory was in the Southeast region with just 3.7 months of supply. Beers did note that “REALTORS® are still moving a lot of homes, and they’re moving them more quickly than last year.” The statewide average days on the market fell 5.2 percent over the last 12 months to just 91 days in October.
“We’ve got very favorable mortgage rates and a healthy state economy, but until we break through on the supply side, sales will struggle to grow, and prices will increase at a fast pace,” said WRA President & CEO Michael Theo. The 30-year fixed-rate mortgage stood at 3.69 percent in October, which is only slightly higher than the all-time low of 3.35 percent in November and December 2012. The seasonally adjusted state unemployment rate has inched up to 3.3 percent, after dropping to a record low 2.8 percent in April and May this year, but the state is still essentially at the level economists consider full employment. “Plus, we’re still creating jobs,” said Theo. Private sector jobs continue to grow despite losses in the manufacturing sector. Total private non-farm employment grew by 17,200 jobs over the last 12 months, according to the Wisconsin Department of Workforce Development. “Strong demand and weak supply force prices up, and that’s what we’ve been seeing all year,” he said. Year to date, prices are up 7.1 percent, which far outpaces inflation.
“Unfortunately, new construction hasn’t helped improve the supply problem,” said Theo. Through the first three quarters of 2019, there were 7.3 percent fewer building permits pulled for single unit homes compared to that same period in 2018. “The real key to breaking out of this supply problem is to increase new listings, and these have increased in each of the last two months,” said Theo. While new construction is very important to the overall supply of homes on the market, so too are existing homes for sale. The total number of new listings of existing homes in October alone — which included 8,196 newly listed homes — approaches the magnitude of the total number of permits pulled for single-family homes over the first nine months of the year, which were 8,446 permits. “With new listings up again, we may be seeing some initial signs that inventory will finally start to improve,” said Theo. However, he noted that we are still in a strong seller’s market. “Buyers need to be ready to move quickly in this market, and that means getting their financing pre-approved as they work with a REALTOR® who is experienced to find the right home,” 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.