By Tony Wittkowski | Business Reporter | The Herald-Palladium
ST. JOSEPH — August proved to be the most successful month of housing sales in 2016 in Southwest Michigan.
Nearly 390 houses were sold, which was the highest number so far for 2016. Since May, the number of houses sold has ranged from 331 to 375. August 2016 was up 4 percent over August 2015 when 374 houses were sold.
Year-to-date, the number of houses sold was up 7 percent over 2015.
“With August sales and selling prices, we now have four months in 2016 that have set record numbers,” said Gary Walter, executive vice president of the Southwestern Michigan Association of Realtors Inc. “When we look at how the market performed in the month of August back to our peak year in 2006, August had the highest number of houses sold and total dollar volume.”
While selling prices stumbled in August, the total dollar volume in August was still up 2 percent when compared to 2015. Year-to-date, the total dollar volume was up 10 percent over 2015.
The average selling price in August at $211,200 was down 2 percent from August 2015 when the average selling price was $214,700.
The median selling price in August dropped 8 percent from August 2015.
At the end of August there were 2,363 houses on the market. At this number the inventory had an 8.2-month supply of homes for buyers. In August last year, there was a 9.8-month supply of houses for sale.
The number of bank-owned or foreclosed homes as a percentage of all transactions in the Southwest Michigan market remained 10 percent in August. Since April, the percentage has ranged from 9-11 percent.
Locally, the mortgage rate was 3.56, up slightly from 3.5 in July. In August 2015, the rate was 4.1. Nationally, the Freddie Mac mortgage rate in August was 3.43 compared to 3.44 in July 2016.
Across the country
According to the National Association of Realtors, existing home sales inched backward in August for the second consecutive month despite mortgage rates at near record lows.
Total existing home sales declined 0.9 percent to a seasonally adjusted annual rate of 5.33 million in August – from a revised 5.38 million in July. After last month’s decline, sales are at their second lowest pace of 2016, but are still slightly higher than a year ago.
NAR chief economist Lawrence Yun said recent job growth is not yielding higher home sales.
“Healthy labor markets in most of the country should be creating a sustained demand for home purchases,” he said. “However, there’s no question that after peaking in June, sales in a majority of the country have inched backwards because inventory isn’t picking up to tame price growth and replace what’s being quickly sold.”
Yun said the predictions of a sales breakthrough as a result of this summer’s low mortgage rates failed to materialize because supply and affordability restrictions continued.
Regionally, existing home sales in the Midwest decreased 0.8 percent to an annual rate of 1.27 million in August, but are still 0.8 percent above a year ago.
The share of first-time buyers was 31 percent in August, which is down from 32 percent in July and a year ago. First-time buyers represented 30 percent of sales in all of 2015.
Nationally, the total housing inventory at the end of August fell 3.3 percent to 2.04 million existing homes available for sale, and is now 10.1 percent lower than a year ago.
The total housing inventory has declined year-over-year for 15 straight months. Unsold inventory is at a 4.6-month supply at the current sales pace, which is down from 4.7 months in July.
“It’s very concerning to see that inventory conditions not only show no signs of improving, but have actually worsened in recent months from their already suppressed levels a year ago,” Yun said. “Without more supply, the U.S. homeownership rate will remain near 50-year lows.”