Market Update 6.28.2024

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

The average change in CMI over the past month is -6.1%, a steeper fall than the -5.0% we saw last week . This is increasing the downward trend that started 6 weeks ago. As sellers compete with each other, price reductions are still increasing in both size and frequency.

This week we only have 3 cities showing an increase in their Cromford® Market Index over the past month, while 14 have declined.

Avondale is the biggest mover in favor of sellers. We have a much longer list of cities that moved substantially in favor of buyers: Paradise Valley, Gilbert, Goodyear, Peoria and Fountain Hills.

9 out of 17 cities remain seller's markets over 110. We have 2 cities that are balanced, while the remaining 6 are buyer's markets.

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All those red dots with the arrow pointing down indicated the month over month CMI trend is down, with the red signifying the trend favors buyers.

The reason you can still have a 'sellers market' in spite of the red down arrow is the CMI score. 

To the degree the CMI is over 110 it indicates the relative supply (inventory / sellers) vs. demand (buyers) favors sellers.

This current trend is born of my oft repeated 'mantra for the year-to-date' ~ generally speaking: 

Inventories (Active Listing Counts) are increasing disproportionate to buyer demand (Sales or Listings Under Contract).

This point is worth repeating as the trend of increasing inventory relative to demand is something we haven't seen for maybe a decade - longer than many have been in this practice.

In the long term CMI chart below you can 'see' the last time we approached a balanced market was 10 years ago. 

Yes, there's the dramatic dip in supply in 2022, when would-be sellers stayed out of the market to preserve their low mortgage rate - this offset the simultaneous downtrend in demand at that time, for the same reason - the unprecedented 4% rapid rise in mortgage rates from 3% - 7%.

What's happening today that differentiates from 2022 is listings are accruing, even while demand is on the wane. 

To the extent mortgage rates improve for buyers this dynamic could shift quickly. 

That said, the luxury sector has enjoyed an incredible 'ride' these past few years. 

With over half the transactions being cash, luxury has been more resilient. 

The recent softening in the luxury sector is noteworthy, albeit the number of transactions is still ahead of last year and there is the seasonal component self-evident here:

All of the above explains: 

• why your sellers may complain of lack of showings
• why average days on market are increasing
• why price reductions are on the rise
• why the historically lagging indicator, average prices, will moderate if this trend isn't reversed