Tuesday, September 18, 2012

Single-family home sales activity hits four-year high in August

Note: CAR updates their home sales data irregularly. They added new sales data today, so I have updated the sales analysis for the second time in a week:

The home sales total for metro Denver for August 2012 was up 16 percent from August 2011, and 2012 continues to look like the most active year for home sales since 2008. August's sales total, which is a 3-month moving average for sales totals provided by the Colorado Association of Realtors, was at  3,809 sales during August 2012. There were 3,268 sales during August 2011. This is fairly similar to August 2008's total of 3,921.

This article examines single-family homes only.

The first graph shows the 3-month moving average for each month. August's total continues a trend in which 2012 is experiencing some of the highest sales totals reported in 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 eleven months in a row of year-over-year increases, with August 2012 up 14 percent from August 2011. Sales totals in the 12-month average are still down from where they were during 2005 and 2006, but they have come up about 19 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 fourteen months and statewide, sales activity is also at a four-year high with the most sales overall since 2008. August sales were up 14 percent over August 2011 with 6,721 sales in the state. There were 5,887 sales during August of last year.

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 eleven months, and reached a growth rate of 13 percent during August 2012, which continues a growth trend that surpasses that which was in place before the financial crisis of 2008.

The Colorado Springs area is also showing signs of growth, although at a smaller pace. The home sales total for August 2012 was up 8.5 percent over August 2011 and has increased year over year for thirteen months in a row. However, 2012 sales activity in the Colorado Springs area is only at a three-year high compared to the four-year high in the metro Denver area.

The year-over-year increase in the 12-mo average was at 9 percent during August and thus was considerably smaller than the growth rates reported in the metro Denver area, and recent growth also fails to match that which was seen during the period of the homebuyer tax credit in 2009 and 2010. 

The pikes peak area continues to show a more shaky housing recovery than many parts of the state, and this is likely due to softness in employment in the Colorado Springs area.

Overall, demand for home sales continues to build, spurred by low interest rates and easy money policies such as the recently-announced third round of quantitative easing.