Monday, October 31, 2011

September sales: home sales transactions in Colorado, metro Denver and Colo. Springs

There were 2,611 existing home sales in metro Denver during September. This is up 10.7 percent from September 2010's total of 2,357. Statewide, there were 4,845 sales in September after rising 13 percent from September 2010's total of 4,286. In the Colorado Springs area, sales rose 11.4 percent from September 2010's total of 603 sales to this year's September total of 672.

Typically, I report the number of home sales closings for each month. Naturally, there is a seasonal cycle for home sales that can be seen in the first graph below. Sales typically bottom out in January or February, while they typically peak in July or August.

This seasonality makes it somewhat difficult to immediately see patterns over several years. In the first graph, we can see a gradual drift downward over the past 4 years. However, over the past three years, the presence of the home buyer tax credit has further complicated the picture by changing the usual distribution of sales across the year of 2010. As can be seen in the graph, the usual pattern of sales transactions has been altered during 2010 due to a number of buyers rushing to put homes under contract before the April expiration of the credit.

This has made it difficult to make year-over-year comparisons for each month.

In order to make it easier to compare activity year-over-year, and to make it easier to identify multi-year trends, I have calculated 12-month moving averages for each month in the three graphs below. This helps erase some of the seasonality, and also allows us to make more reliable comparisons with 2010 in spite of the tax credit distortions.

Statewide, the 12-month moving average for home sales in September was 4,701 closings. This is down 2.1 percent from September 2010, when the average was 4,802 closings. It is also the 13th month in a row in which the year-over-year comparison has been negative. The September average was down 33 percent from October 2005 when the average peaked at 7,033 closings.

A similar trends was evident in metro Denver where the September average was 2,604 closings, which is a decline of 3.2 percent from September 2010's average of 2,692. The metro Denver average peaked at 3,563 during September 2005. The year-over-year change has been negative in metro Denver for the past 13 months. The September 2011 average is down 27 percent from September 2005 when the metro Denver average peaked at 3,563.

In the Colorado Springs/Pikes Peak area, the September 2011 average was 682 closings, which is down 4.1 percent from September 2010's average of 712. The year-over-year change in the 12-month average has been negative for the past 11 months. The September 2011 average is down 37 percent from May 2006 when the Colorado Springs average peaked at 1,089 closings.

In all three areas we find that the average has increased over the past three months. However, the average continues to be down year over year, and this suggests that there is still a fair amount of reticence on the part of buyers in the market for existing homes. It is also clear that total home sales continue to be well down from the peak levels seen during 2005 and 2006.

Note: These transaction totals are for single-family structures only.