Friday, September 14, 2012

Home sales accelerate during June in metro Denver, statewide

The home sales total for metro Denver for June 2012 was up 21 percent from June 2011, and hit the highest total reached since September 2008.  June's sales total, which is a 3-month moving average for sales totals provided by the Colorado Association of Realtors, was at 3,631 sales during June 2012. There were 2,992 sales during June 2011. The last time homes sales were higher was September 2008 when there were 3,758 sales. This article examines single-family homes only.

The first graph shows the 3-month moving average for each month. June's total was the highest reported in almost four years.

Looking at the broader trend, we do find that home sales activity has been up in recent months. In the 12-month moving average, which removes the monthly seasonal issues, we see that there have been nine months in a row of year-over-year increases, with June 2012 up 15 percent from June 2011. Sales totals in the 12-month average are still down significantly from where they were during 2005 and 2006, but they have come up about 16 percent from the sales nadir reached during May 2011.

We see a similar trend statewide in home sales, where the home sales total (3-month average) has been up, year over year, for each of the past twelve months and is now at the highest value for any month since September 2008.

We also see an overall building trend of more sales activity at the statewide level in the 12-month moving average. The 12-month average has been up year over year for the past nine months, and reached a growth rate of 15 percent during June 2012, which is the largest growth rate since 2005.  We can see that the 12-month overage overall has been building since June of 2011:

The Colorado Springs area is also showing signs of growth, although at a smaller pace. The home sales total for June 2012 was up 6.3 percent over June 2011 and has increased year over year for eleven months in a row. 

The year-over-year increase in the 12-mo average was also relatively moderate and was at 9 percent during June and does not begin to match growth rates seen during the homebuyer tax credit and prior to 2007.   This is different from what we saw in metro Denver and statewide where growth rates in sales have returned to pre-recession levels.

Demographics and interest rates continue to benefit home sellers. In-migration looks to continue to be relatively strong while new single-family production continues to be 50 to 60 percent below peak levels. Home prices have begun to accelerate in recent months, although current risks to global economic growth would impact local demand for real estate if negative trends accelerate.