Monthly Market Indicators
The chatter about housing price bubbles has increased this summer, as observers attempt to predict the next shift in the residential real estate market. It is far too early to predict a hard shift away from higher prices and lower inventory, but the common markers that caused the last housing market downturn are essentially present. Wages are up but not at the same pace as home prices, leading to the kind of affordability concerns that lead to lower sales at lower prices. At the same time, demand is still outpacing what is available for sale in many markets.
New Listings in Sioux Falls increased 2.2 percent to 468. Closed Sales were up 10.9 percent to 347. Inventory levels fell 24.5 percent to 954 units.
Prices continued to gain traction. The Median Sales Price increased 6.3 percent to $210,000. Days on Market was up 2.0 percent to 73 days. Sellers were encouraged as Months Supply of Homes for Sale was down 31.2 percent to 3.1 months.
Consumer spending on home goods and renovations are up, while more people enter the workforce. Employed people spending money is generally good for residential real estate. Meanwhile, GDP growth was 4.1% in the second quarter, the strongest showing since 2014. Housing starts are down, but that is more reflective of low supply than anything else. With a growing economy, stronger lending practices and the potential for improved inventory from new listing and building activity, market balance is more likely than a bubble.
Housing Supply Overview
There are beginning to be hints of more supply in several markets across the country, coupled with a slowdown in total sales. These factors could potentially slow the long-standing trend of year-over-year median sales price increases. For the 12-month period spanning August 2017 through July 2018, Closed Sales in Sioux Falls were up 4.1 percent overall.
The overall Median Sales Price was up 6.0 percent to $210,000.
Market-wide, inventory levels were down 20.7 percent. The construction type that lost the least inventory was the Previously Owned segment, where it decreased 17.9 percent. That amounts to 3.4 months supply for Single-Family homes and 3.7 months supply for Condos.