3 Months of Price Weakness Expected
Mid Month Pricing Update and Forecast
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 May 15, we are currently recording a sales $/SF of $150.42 averaged for all areas and types across the Arizona MLS. This is up 0.1% from the $150.25 we now measure for April 15. Our forecast range midpoint was $151.29, with a 90% confidence range of $148.26 to $154.32. We were correct in forecasting last month that the average $/SF would rise less quickly, but after an extremely strong rise between March and April we saw a very small increase over the past month.
On May 15 the pending listings for all areas & types shows an average list $/SF of $153.97, up 1.3% from the reading for April 15. Among those pending listings we have 95.0% normal, 2.0% in REOs and 3.0% in short sales and pre-foreclosures. This mix contains fewer short sales and pre-foreclosures than last month.
Our mid-point forecast for the average monthly sales $/SF on June 15 is $151.94, which is 0.8% above the May 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $148.90 to $154.98.
So although last month’s rise was pretty small, we are still expecting a respectable increase in prices over the next 31 days.
Beyond those 31 days we would expect to see 3 months of price weakness as the third quarter sales mix tends to include fewer high end homes than the rest of the year. However there is no sign of supply and demand converging and the overall long term trend is still upwards.