Existing home sales decline as median prices rise
May’s average sales behind last year’s by 6.9 percent

By Jordyn Noennig - Special to The Freeman

June 24, 2014

MADISON - After a long winter hurt the sales of existing homes, sales in the month of May continued to lag behind last year’s average. But median prices of those same homes rose again from April in Wisconsin.

The Wisconsin Realtors Association released a report Monday showing May’s home sales averages were behind May 2013’s by 6.9 percent, while the average price of homes rose 3.8 percent from last year.

This marks the fifth straight month of reduced home sales compared to sales in the housing market last year.

According to Michael Theo, WRA president and CEO, the slowdown might be tied to lending reforms resulting from the Dodd-Frank financial overhaul law.

Federal regulators had proposed requiring a 20 percent down payment if a loan is to be sold in the secondary market. While this provision was not implemented, other tighter lending restrictions did take effect in January.

“The combination of a slight increase in mortgage rates, rising home prices and these tighter lending regulations may have kept some potential buyers out of the market so far this year,” Theo said.

Home sales for May were down to 6,970, while last years sales reached almost 7,500. 

Sales were stronger in May than in April, with only 5,304 sales during the latter.

The WRA believes sales were down through April this year due in part to the harsh winter.  But the organization is not sure why sales in May are still behind.

“Even though last year was a strong year for sales, we expected a slight bounce in May sales as the prolonged winter ended,” said Steve Lane, chairman of the WRA board of directors.  “But we haven’t seen that bounce yet.”

Home sales in May were down in every region in the state. This barely includes the Northeast region, including Fond du Lac and Manitowoc counties, with only one more house sale in the region during last year’s May than this year’s.

The West and North regions fared better than the rest of the state, with drops in sales at 2.2 percent and 3.8 percent respectively.  

The Southeast region, including Waukesha and Milwaukee counties, fell 9.9 percent for home sales in May compared to 2013. The South Central region fell 9.3 percent, while the Central region of the state fell the farthest with a drop of 12.5 percent from last May’s sales.

 

Southeast region’s median price up 4.6 percent

The statewide median price of homes rose to $150,000 for May 2014, about a 3.8 percent raise from May 2013 home prices.

The Central region of the state, which had the biggest drop in sales, also was the only region that also declined in home prices from May 2013. The region, including Adams and Clark counties, was down 3.3 percent.

Sales for the North region was raised to 20.6 percent in May 2014 compared to May 2013.

“Median prices are often volatile in these two regions due to the shifting mix of primary versus vacation homes that sell in any given month,” Theo said.

The median home price for the Waukesha and Milwaukee Southeast region is up 4.6 percent.

The South Central median price of homes had less than a one percent raise. The price average of that region went from $173,000 to $174,000 for the month of May.

The median price of home sales is up more than $10,000 from just April this year.

The Wisconsin Housing Affordability Index measures the percent of the median priced home that the median family income can afford.  The affordability index fell by 11 percent this May compared to last May, but the WRA still emphasizes buying a home is beneficial.

“With median home prices up in 27 of the last 28 months, buying a home continues to be a good way to accumulate wealth and it’s a physical asset that should keep pace with inflation over the long term,” Theo said.

www.wra.org