Tuesday, April 17, 2012

Home sales rise again in metro Colorado, metro Denver and Colorado Springs

The number of single-family home sales closings increased again in February in metro Denver, the Pikes Peak Region, and statewide. According to home sales information released by the Colorado Association of Realtors, the number of single-family closings rose 13.5 percent in metro Denver during February 2012 compared to February 2011. Over the same period, closings rose 17.6 percent statewide, and 14.3 percent in the Pikes Peak region. Statewide in February, there were 3,746 closings. 2,036 of them were in the metro Denver region and 511 occurred in the Pikes Peak region.

The number of closings in all three measures has increased, year over year, each month for the past eight months (July 2011-Feb 2012).

This recent growth trend has also begun to show up in the 12-month moving averages used to track trends in home sales. The highly-cyclical nature of home sales trends makes it difficult to track multi-year trends in home sales. The addition of the homebuyer tax credits from 2008 to 2010 further complicated the picture. So, I have smoothed out the sales totals using a 12-month moving average for each month.

In the first graph, we see the moving average in home sales compared to year-over-year changes in the average for the metro Denver area. The trend in home sales closing had been downward since mid-2005 and accelerated in early 2009. From March 2008 until September 2011, every month showed a negative year-over-year change in home sales. In February, the year-over-year change was positive for the fifth time in 47 months, with an increase of 4.1 percent. There now appears to be a growth trend in single-family closings.

The second graph shows the same measurements for Colorado statewide. The year-over-year change in the statewide average for home sales turned positive in February for the fifth time in 15 months. Statewide, transactions moved into positive territory in response to the homebuyer tax credits that were were offered in 2009 and 2010, but moved into negative territory again after the expiration of the credits. The statewide moving average increased 5.7 percent in February, year over year, and was the largest increase recorded since 2006.

The third graph shows the same measures for the Pikes Peak region. The homebuyer tax credit produced much larger changes in the regional trends in the Pikes Peak region than in metro Denver or statewide. The year over year change in February was positive, making it the fourth time in fourteen months that the year-over-year change in average sales has been positive. Excluding the run-up in home sales produced by the tax credit in 2009 and 2010, the average in home sales had been largely flat since mid-2009 in the Pikes Peak region, but has shown some slight signs of increase in recent months.

Conclusions: Sales activity continues to show signs of growth, and in some cases is at multi-year highs. Interestingly, new sales activity has not necessarily translated into robust growth in home prices. Home price data shows prices to still be essentially flat in many areas, or even decreasing, according to FHFA and others. See the home price archive for more.