According to Movoto Real Estate’s State of the Real Estate Market report, the median cost per square foot for a home increased by 14.9 percent in July 2013 compared to July 2012, while inventory dropped by almost 16 percent year-over-year. At the same time, the median list price per square foot on a month-over-month basis held steady, while the number of homes for sale increased.
The fact that the list price has not increased on a month-over-month basis indicates that the inventory supply is starting to catch up with demand. Going forward, we expect prices to continue to move laterally on a month-over-month basis. Higher mortgage rates and increased inventory will keep prices from increasing at the same pace we saw in the first half of the year.
Right now, the real estate market is mixed. Sellers should consider listing their homes to take advantage of the increased price per square foot. Home buyers, on the other hand, should keep their eyes on the monthly change in list price per square foot. For the first time this year, the price did not increase, which could be a sign that the market is loosening and their buying power could increase.
Movoto’s State of the Real Estate Market is broken down into two sections. We examine the overall list price per square foot and the inventory level across 38 geographically diverse cities. Each of these sections are further broken down for an analysis of data on month-over-month and year-over-year basis. Data used to compile the report is taken directly from the each city’s Multiple Listing Service.
Price – Year Over Year
Overall, the median list price per square foot increased in 36 of the 38 cities we track, rising 14.9 percent compared to the same time last year. In July 2012, the median list price per square foot sat at $157; this increased to $181 at the end of last month.
The three cities that saw the biggest jump in price were:
- Sacramento: The median price per square foot for a home in Sacramento jumped up 64.5 percent in the last year. In July 2012, a home buyer could expect to purchase a home for $93 per square foot. Today they could expect to pay $153.
- Phoenix: The median list price per square foot for homes in Phoenix increased from $91 to $127 over the past year. This is a 39.6 percent increase.
- Mesa: A Mesa home will cost buyers $118 per square foot, a significant increase from $89. This is a 32.6 percent increase.
The cities that saw a decrease in list price were New Orleans and Chicago. A home in New Orleans is 2.2 percent less expensive than at the same time last year, while a home in Chicago will cost home buyers 1.3 percent less.
Price – Month Over Month
Prior to July, the median list price per square foot increased for six months straight, a bad sign for potential home buyers looking to find a deal. July numbers indicate a halt to the price increase. In June the list price per square foot was $181. At the end of the July the list price was also $181. This is a 0 percent increase.
While this is good news for home buyers, our data indicates that, for the past two years, there has been little change in the price between June and July. For example, during the same time in 2012, the list price per square foot decreased from $158 to $157 per square foot. In 2011, prices remained flat from June to July at $154 per square foot. In other words, the fact that prices did not increase from June to July is seasonal.
Inventory – Year Over Year
Of the 38 cities we track, 32 saw a decrease in inventory levels compared to the same time last year. Overall, at the end of July there were 98,689 homes for sale, compared to 117,815 during the same month last year. This is a 16.2 percent drop in inventory. Cities that saw the greatest decrease in homes for sale were:
- Detroit: Compared to a year ago, there are 45 percent fewer homes on the market. In July 2012, there were 3,464 homes for sale. At the end of last month, 1,906 homes were on the market. This is a decrease of 1,558 homes.
- Sacramento: Sac-Town narrowly lost to Detroit. Compared to a year ago, Sacramento’s inventory dropped by 44 percent, going from 2,340 to 1,311. This is a decline of 1,029.
- Boston: Compared to last year, there are 43.5 percent fewer homes on the market. At the end of July 2012, there were 1,429 on the market, while at the end of last month there were 807 homes. This is a decrease of 622 homes for sale.
At the opposite end of the spectrum, Las Vegas saw an increase in the number of homes on the market. Homes for sale in Sin City increased by 23.3 percent, moving from 3,435 in July 2012 to 4,237 at the of last month. However, the list price per square foot for homes in the city actually increased. The combination of these two facts means that Las Vegas over-corrected during the downturn and had a large amount of home buyer demand.
Inventory – Month Over Month
Across all major cities we track, there were 98,689 homes for sale, slightly more than 4 percent higher than at the end of June, which finished with 94,640 homes on the market. This increase of 4,049 homes marks the third straight month that inventory has risen. This is to be expected as we enter the busy part of the home-buying season, when home buyers are more likely to purchase real estate.
To place this in perspective, during the same time in 2012 and 2011, inventory declined across the cities we track, which is a good sign for prospective buyers going into the second half of this year.