Phoenix Metro Area August Home Sales

Phoenix region home sales fell last month to the lowest level for an August in 14 years amid especially weak new-home sales. Demand from investors remained relatively strong, especially for the lowest-cost homes, which helped push the median sale price down for the second consecutive month, a real estate information service reported.

Last month a total of 7,113 new and resale houses and condos closed escrow in the combined Maricopa-Pinal counties metropolitan area. That was down 6.5 percent from the month before and down 17.0 percent from a year earlier, according to MDA DataQuick of San Diego, which tracks real estate trends nationally via public property records.

On average, sales have decreased 0.6% between July and August since 1994, when DataQuick’s complete Phoenix-area statistics begin. August’s sales total fell 29.5 percent below the average August tally of 10,124 sales.

Last month’s total resales – existing (not new) houses and condos combined – fell 7.1 percent from July and fell 16.0 percent from a year earlier, to the lowest level for a August in two years. However, while sales of existing detached houses declined 19.1 percent year-over-year, resales of condos increased 12.1 percent from a year earlier.

It was August’s new-home sales, which were the lowest for that month in 13 years, that drove the region’s total sales count to the lowest level for an August in 14 years. Sales of newly built houses and condos fell in August to 638, down insignificantly from July and down 26.3 percent from a year ago.

In August, buyers paid a median $130,000 for all new and resale houses and condos that closed escrow in the Phoenix metro area, down 1.5 percent from $132,000 in July and down 3.7 percent from $135,000 a year ago. Last month was the second in a row in which the median fell on both a month-to-month and year-over-year basis. The August median stood 50.8 percent below the peak $264,100 median reached in July 2006.

Another price gauge analysts watch, the median price paid per square foot for existing single-family detached houses, dipped for the second consecutive month to $71. That was down 1.4 percent from $72 in July but still 1.4 percent higher than the $70 median paid per square foot a year ago. Last month’s figure stood 58.5 percent below the $171 peak in August 2006.

Contributing to last month’s year-over-year decline in the overall median sale price was the drop in sales of new homes, which typically sell for more than resale homes. A decline in new-home sales puts downward pressure on the median, the point where half of the homes sold for more and half for less.

Another factor influencing last month’s dip in the overall median sale price: There was a significant increase in the percentage of sales occurring below $100,000. In August 34.7 percent of total sales were for less than $100,000, compared with 32.5 percent in July and 32.6 percent a year earlier.

Cash buyers, who are often investors, snapped up many of the sub-$100,000 homes.

Those using cash accounted for 41.3 percent of all August home sales, up from 37.6 percent in July and 35.1 percent a year earlier. Last month’s cash buyers paid a median of $95,000, down from $100,000 in July but up from $90,000 in August 2009. Specifically, these were transactions where there was no indication of a purchase loan recorded at the time of sale. Some of these “cash” buyers could have used alternative financing arrangements outside of a typical, recorded purchase mortgage, and in some cases they might take out mortgages after their purchases. All-cash deals have become popular in many Western markets where prices have dropped sharply, luring investor buyers who don’t always qualify for traditional mortgages. Moreover, sellers favor the relative speed and certainty of all-cash transactions.

Absentee buyers, which would include many of the cash buyers, purchased 43.8 percent of all homes sold in August, up from 41.9 percent in July and up from 40.5 percent a year earlier. Last month’s absentee buyers paid a median $109,000, down from $112,000 in July and $110,000 a year ago. While absentee buyers are mainly investors, they can include second-home buyers and others who indicate at the time of sale that the property tax bill will go to a different address.

First-time home buyers are another big force in the market. Last month 40.4 percent of all Phoenix-area home purchase loans were low-down-payment, government-insured FHA mortgages, a popular choice for first-time buyers. That was down slightly from 42.7 percent in July and 45.5 percent a year earlier.

Many of the homes that investors and first-time buyers purchase are lender repossessions, which have decreased over the past year but remain a large portion of the market. Last month foreclosure resales – homes that had been foreclosed on in the prior 12 months – represented 49.7 percent of the resale market, down from 50.5 percent in July and 57.2 percent a year earlier. The peak for foreclosure resales was 66.2 percent in March 2009

Meanwhile, on the foreclosure front, lenders foreclosed on 5,669 house and condo units in the two-county Phoenix area last month, down 1.0 percent from July but up 28.3 percent from August 2009. During the first eight months of this year, 42,191 housing units were lost to foreclosure, up 10.3 percent from the same period last year.

The foreclosure figures are based on the number of Tustees Deeds filed with county recorder offices. The document signals that a home was lost to foreclosure. The foreclosure totals can include units that the county assessor has designated as condos, but are currently used as apartments (e.g. a 100-unit complex designated as condos but used as apartments could be foreclosed on and those units would be reflected in the foreclosure total for that month). For this reason and others, the number of homes foreclosed on has seesawed, and a single month’s increase or decline doesn’t necessarily indicate the beginning of a lasting trend.

Phoenix MSA

Number of sales	Aug-09	Aug-10	%Chng
Resale houses	6,953	5,628	-19.10%
Resale condos	755	847	12.20%
New homes	866	638	-26.30%
All homes	8,574	7,113	-17.00%

Median sale price	Aug-09	Aug-10	%Chng
Resale houses	$130,000	$130,000	0.00%
Resale condos	$103,900	$78,250	-24.70%
New homes	$185,866	$200,000	7.60%
All homes	$135,000	$130,000	-3.70%

Media calls: Andrew LePage (916) 456-7157