Last month, at the peak of the national economic crisis (so far), Austin home sales dropped 39% from last November, dropping from 1,805 units in 2007 to 1,086 today. During the same one year period, the median sales price fell 2.9% from $185,200 to $179,900.
In looking at this data, it’s the sales volume that is the big news — much more so than the small price drop. From a volume perspective, last month was the weakest November in 11 years. The number of transactions was roughly half the number 2-years ago during the 2006 market peak. While median sales prices dropped 3% year-over-year, it’s important to note that median price changes do not necessarily mean that home values have changed. The median price factors home sales prices and the mix of sales. So, if prices increase slightly but sales boom for inexpensive houses while sales fall on expensive house, the median price will likely decrease while house values may actually go up. In the current market, we’re seeing both ends of the market under unusual pressures: new home buyers have trouble getting credit and high-end houses are being hurt by very high jumbo mortgage rates.
The rapid drop in sales volume clearly reflects uncertainty about the ongoing economic crisis. While many forces effect sales –consumer confidence, mortgage rates, credit availability, net migration, and local employment –it is important to note that mortgage rates have dropped to a nearly 40-year low since the end of November, providing a very strong reason for buyers to jump back into the market and reverse the November trend.
For historical context, the following table shows November sales volumes and median sales prices in the Austin MLS for the last 15 years:
Year # Sold Median $
2008 1,086 $179,000
2007 1,771 $185,200
2006 2,141 $172,200
2005 1,975 $167,900
2004 1,630 $147,500
2003 1,362 $151,500
2002 1,304 $149,800
2001 1,388 $152,400
2000 1,245 $148,000
1999 1,340 $130,800
1998 1,222 $119,300
1997 1,004 $113,600
1996 861 $109,400
1995 928 $103,200
1994 727 $ 98,100
SOURCE: TAMU
The numbers reinforce the point that sales volumes have dropped dramatically — to 1997 levels — while median prices have dipped just slightly, behind only last years record levels.
