December 2012 Resale Data Rodeo

The median price per square foot rose again last month.  Here
are the stats…

Month to month:

• 1.9% for detached homes
• 1.4% for attached homes
• 1.8% in aggregate

For the Year 2012:

• 12.6% for detached homes
• 18.0% for attached homes
• 14.0% in aggregate

Here’s a look at this price measure since the March 2009 trough:

…and the same thing since the bubble peak in September 2005:

Here’s the Case-Shiller index with an estimation of the last two
months based on the resale data:

This continued price strength was foreshadowed by the very low
levels of inventory (measured in months, to capture both supply and
demand):

As for inventory, it’s just continued to plummet.  Granted,
that usually happens into the end of the year, but the following
graph (which measures inventory in terms of units for sale) shows
that 2012 inventory was much lower than in recent years.

Splitting things out by year as in the above graph is useful for
data with a seasonal influence, so you can compare a month in a
given year against the same month in another year.  But, you
don’t really get as good a read on the long-term trend, hence the
following graph, which shows the same data (units of resale
inventory) starting in 2007:

Sales have been brisk enough, as the following graph shows, but they
haven’t been significantly stronger than in recent years:

So clearly, the decline in months of inventory has been driven
mostly by the dramatic drop in homes for sale, as opposed to the
pickup in sales volume.

Here is a look at months of inventory since 2007.  This is the
same as the blue line in the third graph, just not inverted (again,
to give a better visual on what was happening).

The above graph kind of understates how low we are, because of the
scaling required to show the crazy spike during the worst of the
housing crash.  Perhaps the percent decline is easier to
internalize: year-over-year to December 2012, months of inventory
declined by 38% (all of that happened in the first few months of the
year, by the way).

I’ll wrap it up the same way I did for the past year or so: for as
long as months of inventory stays this low, I would expect the price
pressure to be to the upside.

Could this change?  Yes.  Candidates include more
inventory (maybe brought out by higher prices), economic weakness,
or higher rates, off the top of my head.  I expect all of these
things to happen to some degree eventually, but they haven’t yet,
and who knows when they will.  For now, the market remains very
inventory-constrained and prices are likely to continue reacting as
they have been.