I’m removing the “strongly” from my forecast in September, “My conclusion is that home prices will increase strongly in 2019.”
I’ve been reading a lot of stories for the last few months about Seattle (especially) but also Los Angeles cooling off. I’ve been on the lookout for weakness in the Phoenix market.
We didn’t see any signs of cooling in the metro Phoenix real estate market until October. The change is nothing big but you need to watch it.
It looks like the Phoenix real estate market will still be tight in 2019 but not as tight as in 2018. Supply and demand are looking to be more like 2017 or 2016 but with the momentum cooling instead of heating up.
What happened? This is what I found looking at the Cromford Report and the local MLS.
Demand was down a bit this October compared to October 2017.
- The sales were down about 6% (if you adjust for having one fewer business day this October compared to last).
- And the number of homes that are sold but the sales haven’t closed yet (pending sales) is also down a bit. That makes it likely that sales will be down in November and December too.
- New listings hitting the market actually went down a bit!
The supply of homes for sale would been a bit higher if the number of homes hitting the market was the same as last October.
This Month’s Puzzle
That low number of new listings puzzles me. If home prices were high enough to discourage buyers, I would have expected that prices were high enough to encourage sellers.
Maybe sellers know the market isn’t as hot as it was last spring and they’re waiting thinking the market will be hotter in January. That’s my guess today, anyway, sellers are waiting for the high season to begin in January.
If you’ve got a better explanation for the low number of homes hitting the market in October, please let me know in a comment below.
I’ll be watching the new listings hitting the market. They always jump big time in January. If they jump bigger time than usual, I would expect Phoenix home prices gains in 2019 to be even smaller time than I expect right now.
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