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2019 1st Quarter Market Update- New Construction VS Existing Homes
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2019 is turning out to be another problematic year for new construction with 35% fewer sales this January versus last January. Is it all going downhill or have we hit the bottom?
Hi, my name is Jim Keaty with Keaty Real Estate, and this is your weekly Lafayette market update brought to you by Levi Kastner at Thimmesch and Kastner Insurance. Check it out, the MLS reported just 7% less new construction home sales in Lafayette, but March 2019 did out perform March of 2018. Now looking back at the first quarter, going back to 2016, you can see that we’re nowhere near where we want to be in the new construction sector. And the crazy thing is that the volume for new construction reported only a 3% decrease, meaning the average price actually increased to 268,000 from 266,000.
Looking at the new construction actives, you can see that there was 6% fewer actives on the market, meaning there was less supply. So although there is less demand, i.e., sales, the supply’s actually falling faster than the demand is falling so that the average sales price is actually increased slightly.
Check out this next graph showing the new construction inventory falling below the last four years. This would explain the increase in the average sales price. Now 2018 was a banner year for existing home sales, and this trend is continuing as we move into 2019. The MLS reported a 6% increase in the number of existing home sales in 2019 year over year. We also saw a 4% increase in dollar volume sold of existing home sales, indicating a very strong first quarter. But the average sales price has actually falling in the existing home sales sector.
We saw a 2% drop in the average sales price to $204,000 versus the 6% increase in the number of sales. We are selling more homes at a lower price in the existing home sector. You can see that the existing months of inventory fell in February and March, but it is still hovering around six months of supply. At six months of supply, supply equals demand and we should see stable prices going into the second quarter 2019.
So the overview of new versus existing is we saw a 7% decrease in the number of new construction sold. There was only a 3% decrease in the volume of new construction homes, this is because we actually had an increase in the average sales price of new construction homes sold, and we sold less new construction homes at a higher price, leading to a higher average sales price. Contrastly, the existing home sold sector actually continued the trend from last year, and the MLS reported a 6% increase in the homes sold while volume sold increased only by 4%, which was lead by a lower average sales price of existing homes sold.
So if you’re thinking about buying and you’re hoping that prices will continue to fall, all of the data is indicating more demand and less supply over the next six months. And with the drop in the interest rates, you really need to take advantage of this opportunity and start looking now because it could literally cost you thousands of dollars if the demand continues to rise and interest rates increase as predicted.
I’m Jim Keaty with Keaty Real Estate, and this week’s Lafayette market update has been brought to you by Levi Kastner at Thimmesch and Kastner Insurance. I’ll see you next week.