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Number of Homes Sold. That was a surprise! Unexpectedly last September, the number of homes sold in Greater Phoenix fell a bit and then, even more unexpectedly, the trend continued through December. For September through December, Phoenix home sales were down 6% compared to the same period in 2017. (Phoenix homes sales had been up 3% from January through August compared to 2017.)

Number of Homes for Sale. From September through December, the number of active listings increased 14%. Over those same months in 2017, active listings fell 1%, and in 2016 they were up only 3%, so the 14% increase in supply in 2018 was large (although from an extremely low starting point).

Number of Homes Hitting the Market (New Listings). The increase in the number of homes for sale (increase in supply) would have been even larger but the number of new listings hitting the market fell 2% from September through December compared to the same period in 2017.

That was weird to me because the median sold price was about 7% higher in the autumn of 2018 compared to the autumn of 2017. You would think the higher price would have attracted more homes onto the market, not fewer.

Anyway, the net result was that like many West Coast cities and Las Vegas this autumn, the number of Phoenix homes listed for sale increased significantly but despite the increase, the supply of homes for sale was still quite tight.

Why Did New Listings Fall in the Fall?

Until I researched this post, I had a working theory that some home sellers might be waiting until the high season started in January to put their homes on the market. The idea was that the low number of new listings in the autumn would translate into a higher number of new listings starting in January.

It’s January now, so let’s test the theory.

Phoenix New Listings - All
Click on graph to see full size

Okay, that idea didn’t work out. For the first 10 days of January this year, the number of new listings (2,184) is slightly less than last year (2,207). That answers my question about whether some sellers were waiting for the high season to list their houses. They weren’t.

So I still don’t know why the number of new listings was lower from September through December. It’s pretty much the big question behind the residential real estate market the last several years, “Why is the supply of homes for sale so low when prices are so high? Why aren’t people selling their homes?”.

Here’s a couple of possibilities.

  • Demographic Reasons. Older people don’t sell their homes as often as younger people and it seems some of us Boomers are getting older.
  • PBSD (Post Bubble Stress Disorder). After the Great Real Estate Bubble, many people think it’s smarter to just improve their current houses instead of selling and buying better ones.
  • Other. Here are some other proposed reasons but they don’t ring true to me.

What’s your theory? I want to hear it. Leave a comment.

What January Tells Us So Far

Although the number of new listings so far in January is essentially the same as last year;

  • The number of homes sold was down 14% compared to the first 10 days last January, and
  • The number of listings under contract (which foreshadows future home sales) in the first week of January was down 15%.

If new listings continue running similar to last year but home sales continue running lower than last year, then the supply of homes for sale will continue to increase.

Just be aware that the supply of home for sale right now is still super low, around 2.5 months of supply. But, on the other hand, a year ago we had 2.2 months of supply so the supply is loosening up a bit.

This trend would have to continue for months (I’m not sure how many months) for the supply of homes for sale in Phoenix to enter the “normal” range. I consider 4 to 6 months of supply to be “normal” so we have a long way to go to get to “normal.”

Takeaways

  • The supply of Phoenix homes for sale is increasing but right now the supply is still very tight.
  • Home prices should continue to increase but more slowly than the 7% annual rate we saw in 2018.
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