Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.
For the monthly period ending April 15, we are currently recording a sales $/SF of $130.87 averaged for all areas and types across the ARMLS database. This is 1.2% higher than the $129.29 we now measure for March 15. Our forecast range was $127.34 to $132.54 with a mid-point of $129.94. This month the actual result was well within the forecast range, but a little above the mid-point.
On April 15, REO sales across Greater Phoenix (all types) averaged $87.77 per sq. ft. (down 5.1%). Pre-foreclosures and short sales averaged $96.50 (down 4.2%) while normal sales averaged $135.56 (up 1.4%). The market share of normal sales increased again over the last 31 days, moving from 87.4% to 88.2% of sales. REOs lost market share from 7.7% to 7.0%. Short sales and pre-foreclosures also lost market share from 5.0% to 4.8%. The pricing of REOs has been especially volatile and unpredictable over the last five months, but is currently on a weakening trend.
On April 15 the pending listings for all areas & types showed an average list $/SF of $128.72, 0.5% below the reading for March 15. Among those pending listings we have 80.7% normal, up again from 77.9% last month, a lower 7.9% in REOs and a much lower 11.4% in short sales and pre-foreclosures. The average pricing for pending listings within Greater Phoenix on April 15 in each category was: $137.41 for normal, $87.47 for short sales & pre-foreclosures and $88.25 for REOs. All these are lower than last month. However, the continuing shift towards normal listings and more higher priced homes in the sales mix is expected to keep the average $/SF from falling very far.
Our mid-point forecast for the average monthly sales $/SF on May 15 is $130.28, which is 0.4% lower than the April 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $127.67 to $132.89. This is the first time we have forecast a fall in the average price per sq ft since last July, even though it is only a small drop.
We continue to expect the price range between $125 and $135 per sq. ft. to be a natural resting point after the rapid rise from $78 that has occurred since September 2011. It will take a big change in market conditions for prices to move significantly out of this range. In the current conditions we expect the strongest pricing of the year to occur between March and June and any possible breakout over $130 is likely to be short-lived. Pricing is likely to show a little weakness during the second half of the year due to the seasonal build up in supply and weakening demand once the spring is over. It will take a strong recovery in demand to change this expectation.