Missoula Real Estate sales report.
Despite a decline in sales from last month, Missoula’s real estate market remains nearly 20 percent ahead of last year on a year-to-date basis. As of the end of August there were 418 active residential homes for sale in the Missoula market, down 3.5 percent compared to last month and 14.0 percent from the same month last year. Under contract figures have remained strong for several months now, despite low inventory. Average lender rate for mortgages has been increasing steadily over the last several months and, if it continues to rise, we anticipate it to have a downward pull on affordability for buyers in the market for a new home.
Absorption Rate:
The health of the Missoula real estate market is recorded by absorption rates, which is the correlation between the number of active homes on the market and the number that sell per month, on average. According to the National Association of Realtors, a normal market is six months of inventory.
For the purposes of the following two charts, we are utilizing a 3-month average for sales, rather than 12 months, in an effort to more accurately demonstrate the current, short-term absorption rate. Overall, the Missoula market is performing quite a bit better than a normal market. With an absorption rate of 3.8 months in August, the Missoula market is continuing the trend of the best absorption rates in five years. As we enter fall, if more homes come on the market we anticipate seeing the absorption rate deteriorate slightly and move toward a more normal market. However, if inventory levels remain low we don’t anticipate seeing the absorption rate declining unless there is a significant decline in sales. Sales typically taper off after summer however, based on what we’ve seen since March, it is possible residential home sales will remain strong throughout the fall months.
As the market improves, look for consumer confidence in the higher priced homes to increase as a positive indication of overall market health.
Inventory of Homes Listed for Sale:
Over the last several months Missoula has had a shortage of homes on the market and the trend continued through August. While we anticipate home sales to remain healthy throughout the next couple of months, we don’t anticipate seeing the level of active homes to increase to prior year levels.
The following chart presents the total inventory of homes listed for sale at the end of each month since January 2010.
5-Year Home Sales by Month:
Under Contract volume decreased from 155 properties in July to 134 properties in August. July residential sales were incredibly strong in July and while August sales were down from last month, as anticipated, a large percentage of homes that were under contract in July turned into sales in August. The following chart provides a monthly snapshot of total homes sold since January 2009. (Green columns represent Under Contract properties for the current year.)
Buyer Recommendation: Take advantage of low interest rates before they rise and be prepared to pay approximately 98% of asking price on average. With a shortage of inventory, sellers who have their homes competitively priced are sometimes entertaining multiple offers and getting very close to asking price or over asking price. Prior to beginning, or resuming, your search, we recommend that you be prepared with a loan pre-approval letter and ready to look at the good homes immediately to avoid possible multiple offer situations.
Seller Recommendation: Inventory is so low right now that we recommend putting/keeping your home on the market. Buyers currently have limited options, creating the possibility of getting an offer close to asking price now that supply is not quite meeting demand. However, while it seems that average sold prices could increase a little throughout summer it is still very important to price your home reasonably and competitively as the seasonal influx of new listings hit the market in-step with the warmer weather. There has been a seasonal increase in competition which could hold some homes back from selling if they are overpriced. With low inventory, expect more flexibility in home prices for the lower price ranges.
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