Monthly Market Indicators
Rising home prices, higher interest rates and increased building material costs have pressured housing affordability to a ten-year low, according to the National Association of Home Builders. Keen market observers have been watching this situation take shape for quite some time. Nationally, median household income has risen 2.6% in the last 12 months, while home prices are up 6.0%. That kind of gap will eventually create fewer sales due to affordability concerns, which is happening in several markets, especially in the middle to high-middle price ranges.
New Listings in Sioux Falls decreased 10.3 percent to 434. Closed Sales were down 3.1 percent to 344. Inventory levels fell 26.0 percent to 940 units.
The Median Sales Price remained the same at $205,000. Days on Market was down 0.3 percent to 74 days. Sellers were encouraged as Months Supply of Homes for Sale was down 32.4 percent to 3.1 months.
While some are starting to look for recessionary signs like fewer sales, dropping prices and even foreclosures, others are taking a more cautious and research based approached to their predictions. The fact remains that the trends do not yet support a dramatic shift away from what has been experienced over the last several years. Housing starts are performing admirably if not excitingly, prices are still inching upward, supply remains low and consumers are optimistic. The U.S. economy is under scrutiny but certainly not deteriorating.
Housing Supply Overview
The potential of an affordability conundrum has veered into the national spotlight, as household wages struggle to keep pace with home price increases. Yet it is ill-advised to predict a heavy shift toward fewer sales and lower prices. Consumers have learned a lot in the last decade. For the 12-month period spanning September 2017 through August 2018, Closed Sales in Sioux Falls were up 3.6 percent overall.
The overall Median Sales Price was up 5.2 percent to $209,900.
Market-wide, inventory levels were down 20.2 percent. The construction type that lost the least inventory was the Previously Owned segment, where it decreased 16.6 percent. That amounts to 3.4 months supply for Single-Family homes and 4.0 months supply for Condos.