Valley August home sales are weakest in 4 years

It was no easy summer for home sales. May was the worst May in three years. June was the worst June in six years. July was the worst July in seven years. And now August is checking in as the worst August in four years, according to the Arizona Real Estate Center at ASU Polytechnic.

While the number of existing home sales increased slightly in August compared with July, it was still down considerably from August 2005. Summer months are typically the strongest in the housing market and sales drop off after August and don’t pick back up again until the ensuing year, experts say.

There were 5,685 recorded sales in August, the weakest August since 4,940 sales were recorded in 2002. August saw 140 more homes sold than in July.

“Slow sales activity is spreading across the Valley,” said Jay Butler, center director. “You’ve got some areas doing better than others. Median prices are continuing to drop in some communities, especially in the West. That market seems to be slowing down a little more there. It’s probably a little more investor-driven.”

Through August of this year, there were 47,515 sales, a nearly 40 percent decrease from the same time period in last year’s record run-up. While sales are running at about the same number as 2003 when 47,255 homes were sold through August, 2006 will likely end up more like 2002, the last year before the market started its hyper upward climb, Butler said.

“They were stronger months than typical,” Butler said of the end of 2003. “We’re not really expecting that to happen this time around.”

Valleywide, the median sales price peaked in June 2006 at $267,000 and the rapid rise appeared to end in September 2005 with a median price of $263,000, the center said. In August, the median home price was $262,500, down from $264,900 in July.

Median prices dropped between July and August in Phoenix, Mesa and Gilbert. They increased in Scottsdale, Tempe and Chandler, the center said.

Valley real estate agent and economist John Wake uses the center’s studies to keep track of median sales prices on his Internet blog, www.arizonarealestatenotebook.com on the Web. When he compared the price for single-family homes in August 2005 with the price in August 2006, Tempe saw the largest increase of Valley cities with 13 percent, from $265,000 to $299,95O.

Tempe was followed by a 9 percent increase in Phoenix, 8 percent in S cottsdale, 6 percent in Chandler and 3 percent in Gilbert. Mesa’s median was the same in August 2005 as in August 2006 — $240,000. Cities in the west Valley saw the smallest gains in median sales prices. El Mirage, Sun City West and Surprise residents saw the largest losses at 3 percent each. Sun City’s median has

dropped for three consecutive months, Wake’s data shows.

“We’re going into the weak season now,” he said.

“Sales are less. In January, we’ll start seeing prices strengthen up, sales will start picking up. It’s just . . . what are the prices going to be at in January? Typically when you see price increases it’s in the first half of the year and when you see price weakness is in the second half.”

For August 2006, 14 percent of all recorded sales were for homes priced from $125,000 to $199,999, 44 percent for $200,000 to $299,999 and 36 percent for homes priced over $300,000, the center said. Last year, the distribution was 20 percent of all recorded sales were for homes priced from $125,000 to $199,999, 38 percent for $200,000 to $299,999 and 36 percent for homes priced over $300,000.

“Although the median home price showed a slight decrease, mortgage interest rates are higher than a year ago, but remained at about 6.4 percent as in July,” the center said.

“Thus, affordability continues to be an issue.”