Hits keep coming...

 Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

The average monthly change in CMI was -34%. This is the same as last week. The rate of decline in the CMI readings over the past two months is easily the fastest we have ever witnessed.

The negative trend remains extremely powerful. Supply is still growing at roughly 1,000 listings a week while demand is still weakening despite some (possibly temporary) relief in the mortgage rates. We now have 1 city (Buckeye) which is a buyer's market and 2 cities (Maricopa and Queen Creek) that are in the balanced zone between 90 and 110. It is just a matter of days before Maricopa and Queen Creek become buyer's markets and their time in the balanced zone will have been very short indeed. Peoria, Tempe, Gilbert, Chandler, Surprise and Phoenix are all just a week or two away from a balanced market as they all dropped close to 40% in the last month. Based on current trends, these 6 cities will probably be buyer's markets before the end of August.

Things are different in Paradise Valley where there has been very little increase in supply and the 7% fall in its CMI is entirely due to a drop in demand. Fountain Hills and Cave Creek are also seeing declines in their CMI, but at roughly half the rate of the average city in the valley.

Only 5 cities are now over 150. A month ago we had 15.

Buyers are much more aware of the dramatic change in the market than are sellers. New sellers will need to take time to understand just how different market conditions are today compared with 3 months ago. They should not expect multiple bids. They should plan to market their property, not just sell it.

With the Federal Reserve considering a 1% rise in the federal funds rate in their July meeting, demand could drop even lower next month if mortgage rates move sharply higher again.

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Let's drill down on supply and demand, particularly the above-referenced rapid increase in accruing inventories.

Here's the percentage increase in inventory by price range ~

You can't help but notice the inverse relationship - the dramatic increase in inventories stacking up as you go from the higher to lower price ranges.

This begs the question of what's happening on the demand side.

Our best demand indicator is Listing Under Contract.

What we find (once again) is that it's the $300K - to $400K market that is being savaged in terms of demand:

All other price ranges are at or above last year. 

Here's the combination of price ranges $400K-plus just to broadly make the point ~

Takeaway ~ Relative resilience

Supply: 

• While inventories are increasing across the board, there's a clear inverse relationship ie. as you go down in price range you go up in the pace of accruing inventory.

Demand: 

• Looking at the demand side, it's the lower end market (under $400K) that's being crushed, in no small part by our oft mentioned 55% year-over-year effective cost increase - when you factor in the double punch of 25% appreciation plus 30% effective loss of buying power resulting from nearly a 3% YTD increase in 30 year fixed interest rates.
• Demand (by contrast) in the mid and upper ranges, while trending down (somewhat seasonally) is still tracking at or above this time last year.

So, as we quickly move toward a more balanced market we would be remiss at this moment not to note the relative resilience of the mid and upper range markets in the Valley.