Front Range Real Estate Market: Fall Sales Not Falling

Normally, the market slows in the fall as the leaves and the temperatures drop. This fall, however, the market has been unusually active, defying the standard seasonal pattern. Sales volumes are actually remaining steady, if not increasing.

Specifically, the volume of real estate sold across all Front Range markets in October increased 0.1% compared to September’s volume, and was up 11.4% on a year-over-year basis. Sales remained steady, but the number of new listings followed the typical seasonal pattern and fell 8%. Fewer listings and steady sales resulted in a drop in the inventory from 2.3 months to 2.1 months, reversing the four-month trend of rising inventory levels.

Looking ahead, the market’s strong performance in October should continue through the end of the year based on a few leading indicators. First, the number of listings placed under contract in October was up 10% over last year. These under contracts are November and December’s closings.

Second, home sales have been trending up this fall on a national basis. The NAR Pending Home Sales Index, a forward looking indicator based on contract signings, has been rising since the summer and has been above 100 for five consecutive months. (100 is equal to an average level of contract activity)

One more metric that gives us a peek even further into the future is foot traffic – the number of buyers actually touring listings and looking at them for purchase. This is the time of year that foot traffic would normally level off and start to drop. We’re actually seeing the exact opposite. The national Foot Traffic Index published by NAR Research and Sentrilock is skyrocketing. The Index jumped 8.7 points to 65.7 in September, the third consecutive monthly increase.

More and more buyers appear to be staying active or coming into the market this fall. On a macro level, the reasons for the increase in demand can be found in the positive economic news of late, from lower jobless claims to higher job openings to an increase in consumer confidence.

However, something that is not receiving much press, but is certainly impacting the housing market, is the fact that it’s getting easier to secure a mortgage, not harder. According to the Mortgage Bankers Association, the average FICO score of a buyer who purchased a home with a conventional mortgage in September was 755, 4 points lower than the average score in 2013, and 9 points lower than the average in 2012. Of course, we haven’t returned to the bubble days of recklessly easy credit, but the trend for the past two years has been an increase in credit availability, and this is slowly helping first-time buyers enter the market.

Back in the July edition of the 8z Real Estate market update, when many national real estate sites and pundits were talking about a slow down in housing, we predicted “the second half of 2014 looks like it will be quite strong.”