As we make our way out of the traditional home buying season of the summer months, the real estate market as a whole appears to be bucking some recent trends, particularly where inventory is involved. According to Movoto Real Estate’s latest State of the Market report, inventory increased in the past month and is continuing an upward trends as we head into the fall, traditionally the slower months for home buying.
While the market typically sees a decrease in inventory at the end of the summer, the number of homes available actually increased by 2,297, or 2.4 percent, from July to the end of August. At the same time, the median price per square foot decreased 1.1 percent from $181 to $179, the first time this year we have seen it go down (the price per square foot had actually stayed flat from June to July).
This decrease is likely due to the growth in available inventory, but could also be a result of increased interest rates and properties in less desirable parts of cities coming on the market. We expect this trend of flat to decreased price per square foot to continue on a month-to-month basis going forward, while prices will likely stay up when compared year-over-year.
As a result of the increased inventory and reduced price per square foot, we feel that the market at this time is moving towards a buyer’s market. Sellers, on the other hand, will be faced with more competition and the prospect of getting less for their property due to the drop—however slight—in per-square-foot value.
How This Report Is Made
In building Movoto’s monthly State of the Real Estate Market report, we look at 38 geographically diverse cities in order to determine average inventory levels and price per square foot. In addition, we further break down this data on a month-over-month and year-over-year basis. The data used comes from each city’s Multiple Listing Service.
List Price Per Square Foot
The median price per square foot has increased by 13.2 percent for August 2013 compared to August 2012. This time last year, the median price was $158; this year it is $179. The price per square foot increased in 36 of the 38 cities we surveyed.
The three cities that saw the largest increase in price per square foot year-over-year were:
- Phoenix, AZ: August 2013’s median price per square foot for a home in Phoenix increased by $35, or 38.5 percent, over last year’s $91 per square foot.
- Sacramento, CA: Homes in Sactown saw their price per square foot increase by 30.8 percent year-over-year. In August 2012, they were selling for $117 per square foot; in August 2013, that amount had risen to $158.
- Oakland, CA: The other city by the bay had its price per square foot for August 2013 climb by 29.8 percent to $305. It was $235 during the same month last year.
New Orleans, LA was the only city on our index to see a decrease in price per square foot between August 2012 and August 2013. This time last year, a home there was selling for $89 per square foot; this year it’s at $86, a decrease of 3.4 percent. The price per square foot in Cleveland, OH was flat year-over-year at $50.
The median price per square foot had been on a steady increase for the first six months of 2013 before leveling out between July and August of this year. By the end of last month, the median price per square foot had seen its first decrease so far in 2013, down $2 or 1.8 percent from $181 in July to $179 in August. For the sake of comparison, between July 2012 and August 2012, the price per square foot rose $1 from $157 to $158, a change of 0.637 percent.
As mentioned at the top of the article, an increase in inventory is the likely cause behind the slight decrease in price per square foot between July and August this year, although rising interest rates and buyer demand waning due to school starting could also have contributed.
Total Inventory Level
An overwhelming majority of the cities we survey—27 out of 38—saw a decrease in inventory in August 2013 compared to August 2012. The total inventory for this August was 101,086 homes compared to 113,870 during the same month last year, for a decrease of 11.2 percent.
The three cities that saw the largest decrease in inventory year-over-year for August were:
- Detroit, MI: Motor City had 3,456 homes on the market in August 2012, compared to 1,928 this August. That’s a decrease in inventory of 44.2 percent.
- Boston, MA: The home of the Red Sox saw its year-over-year inventory for August decrease by 40.7 percent from 1,237 to 733 homes for sale.
- Houston, TX: This Lone Star State city had 6,269 homes on the market for August, down 27.9 percent from August 2012’s inventory of 8,697.
In terms of increases in inventory year-over-year, Sacramento, CA was the leader. California’s capitol added 453 homes in August versus the same month last year, going from 1,048 to 1,501, an increase of 43.2 percent. Price per square foot in the city climbed 30.8 percent from $117 to $158 over the same period.
Between July and August of this year, total inventory increased by 2.429 percent, from 98,689 to 10,1086 in the 38 cities we track for this report. This is 85,664 more homes than were on the market in April on this year when the gradual month-over-month climb we’re seeing now first began.
This is the first July-August period in more than two years that inventory has increased. In July-August 2011, it dropped by 3.23 percent, while in July-August 2012 it decreased by 3.348 percent, while the past 30 days have followed the slow upward trend in inventory that began this spring.