METRO PHOENIX HOME SALES FOR THE WEEK ENDED JUNE 2, 2008

The numbers are looking better and better after last weeks pull back. We have to expect a holiday week to be light on the sales, especially one that has a holiday on Monday.

This last week included an end of the month, so we experienced a large reduction in inventory levels. The total inventory of SFH (single family homes) dropped by 1,112 to a total of 43,282. The only time I have registered this large of a drop over the last 3+ years of tracking is during the last week of the year, many agents write their listing agreements to expire at the end of the year. The inventory levels are at their lowest level since the first week of the year, and then after that the lowest since April 2007. Supply is still an issue, but instead of getting worse it is slowly improving. With all the foreclosure homes coming on the market, the logical answer for this is that homeowners are taking their home off the market. I would suggest that those homeowners who understand an overpriced home hurts the market right now, are taking them off the market. THANK YOU!

THE GOOD NEWS IS ABOUT DEMAND! Yes, demand continues to improve. I registered 1,279 home sales last week. That is the highest level in over 2 years! Yes, since the week of May 15, 2006, last week was the highest recording of home sales.
Not only do the weekly numbers show this strength, but the 4 week moving average is at nearly 1,200 and we have been experiencing the highest 4 week moving average since May of 2006. Why a moving average? The moving average takes the last 4 weeks sales and divides it by 4. This evens out any dramatic ups and downs, for example the week before last was a holiday week and thus lower. This is a better number.
After meeting with some investors last month, I added a new stat. That is the closed homes. This one varies more dramatically week to week. Many home buyers like to close at the end of the month. I was surprised to see how many close each week, since I thought most everyone closed at the end of the month. The home closings last week reached 1,570, the highest level since July of 2007. More importantly, the 4 week moving average was at 1,146, the highest number since September of 2006. The closings will lag behind the sales for a couple of reasons. First, since we have come out of a period of such low sales, it takes a while to catch up. Second, since many of these short sales take 3+ months to close, that will also delay the catch up period. However, the number is growing nicely and again the best since September 2006!

These are great numbers, but what do they mean? The market is improving. Great can we raise the price of our home? No, on the contrary, prices will continue to slide. But this tells us the slide is nearing a bottom. Most of the sales are happening away from the city centers, like Scottsdale for instance. Most home sellers in Scottsdale have not lowered their price to where the market is. I believe, as Scottsdale was last to loose value, it will be last to bottom. Most of the new financing is available for the entry level buyers. We are seeing multiple offers for some properties priced under $300,000.

Where is the bottom? We will only know when the bottom has hit when we see it in the rear view mirror. In some areas, I believe we will be in an "over sold" capacity. What I mean by "over sold," is just the opposite of what happened in 2005-2006. Then homes were "over bought." Prices were driven to unrealistic values. Now, I believe homes will be driven unrealistically low. We can already find places where you could not build a home for what they are selling for today. That is "over sold."

This weeks Numbers:

Single Family Inventory 43,282
Months of Inventory based on Pending 5.8
Pending Home Sales 7,500
Last 7 days Sales 1,279
4 week moving average Pending Home Sales 7,698
4 week moving average Last 7 days Sales 1,198
4 week moving average Home Closings 1,146

Below are some graphs I created to demonstrate those numbers. You can click on the graph, it will get bigger and easier to see.

The First Graph is SFH sales, comparing the last 6 years. Look how the line this year is straight Up! I believe we will not see such a soft off season this year as buyers sense the bottom and jump into the market.
The Second Graph shows inventory levels over the past 2 years. See how we uncharacteristically are headed down since March, unlike other years.














Graphs 3 and 4 are below. Graph 3 shows how many months of supply their are based on Pending home sales. Numbers below 6 months would lead into a seller's market. But we need to know our numbers. When I say that, I mean understand there are many Pending home sales that are short sales. They take much longer to close and thus show a larger number of Pending home sales.
Graph 4 is 3 lines. One is weekly home sales, you see how jagged that is. The next is the 4 week moving average of weekly home sale, a more evened out line. The big drop 2 weeks ago in home sales was due to the holiday. The last line is the 4 week moving average of home closings. That is rising nicely as we are only about 3 months into the recovery in Demand.

If you have any questions about these numbers, the graphs, the market or about buying/selling a home; please contact me or a member of our team.

Thanks,

Jeff Cameron

The Cameron Team

480-502-7699

jeff@thecameronteam.com