The dog days are here.
Mid Month Pricing Update and Forecast
Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.
For the monthly period ending June 15, we are currently recording a sales $/SF of $151.10 averaged for all areas and types across the ARMLS database. This is up 0.4% from the $150.45 we now measure for May 15. Our forecast range midpoint was $151.94, with a 90% confidence range of $148.90 to $154.98. We were correct in forecasting a rise, but the actual rise was only about half as big as forecast.
On June 15 the pending listings for all areas & types shows an average list $/SF of $154.91, up 0.6% from the reading for May 15. Among those pending listings we have 95.0% normal, 1.8% in REOs and 3.1% in short sales and pre-foreclosures. This mix contains fewer REOs but more short sales and pre-foreclosures than last month.
Our mid-point forecast for the average monthly sales $/SF on July 15 is $152.16, which is 0.7% above the June 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $149.12 to $155.20.
So although last month's rise was somewhat smaller than expected, we are still forecasting a respectable 0.7% increase in prices over the next 30 days.
Supply has been falling quite sharply in the last few weeks while demand is little changed. However, we will shortly be entering the third quarter, a period famous for weaker pricing. This is because the luxury market loses a lot of sales volume during the hottest months, whereas the rest of the market slows to a lesser extent. This is a seasonal effect and does not indicate underlying weakness. We would expect the upward price trend to resume once we get to the end of September.