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 $140.06 averaged for all areas and types across the ARMLS database. This is virtually unchanged (up just 7c) from the $139.99 we now measure for March 15. Our forecast range midpoint was $142.59, with a 90% confidence range of $139.74 to $145.44. Sales pricing over the last 31 days has been considerably weaker than expected but stayed within the lower bound of our 90% confidence range.
On April 15 the pending listings for all areas & types shows an average list $/SF of $143.63, 0.4% above the reading for March 15. Among those pending listings we have 92.4% normal, 2.9% in REOs and 4.7% in short sales and pre-foreclosures. The percentage of short sale and pre-foreclosure transactions continues to fall but REOs were the same percentage as last month.
Our mid-point forecast for the average monthly sales $/SF on May 15 is $141.77, which is 1.2% higher 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 $138.93 to $144.61.
In most years, prices make strong progress between March and June so we felt confident that last month’s forecast was reasonable. Only adding 7c to the average price per sq. ft. between March 15 and April 15 is pretty underwhelming. We are forecasting a more impressive advance for May 15, but we could again be confounded by a negative change in the sales mix.
Normally prices decline between June and September each year, so sellers will be hoping for a stronger pricing trend during the next 2 months than we saw during the last 2 months.
This commentary was provided by Michael Orr of the Cromford Report. Michael Orr is the Director of the Real Estate Center at the W.P. Carey School of Business at Arizona State University.