Lawrence home sales soar, but so do home prices, as Fed cuts interest rates, latest report shows
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This seems backward to me, but August was both the time for back to school and back to looking for a new house. That’s odd because I’ve found that when my kids go back to school, my current house becomes much more livable. Regardless, Lawrence home sales soared in August.
Home sales through much of 2019 have been stagnant or declining in Lawrence. But in August, they were robust. Real estate agents sold 137 homes during the month, according to the latest report from the Lawrence Board of Realtors. That’s an increase of 35% from August 2018. They also are up from August 2017 figures.
Another downturn in interest rates is likely responsible for some of the increased sales activity, Greta Carter-Wilson, president of the Lawrence Board of Realtors, wrote in the monthly report. After the Federal Reserve cut its benchmark rate in late July, 30-year mortgage rates hit lows last seen in 2016.
About the only people who won’t be happy with the August numbers are those who are looking for evidence that the price of housing is declining in Lawrence. That definitely was not the case in August. The lower mortgage rates may not have done much to help first-time homebuyers in Lawrence. The median selling price for a home in August was $219,900. That is nearly a 19% increase from the $185,000 median of a year ago.
Don’t put too much stock in the price data for any one month, as the type of homes available on the market can vary widely from month to month. A bunch of five-bedroom homes sold in one month compared to a bunch of three-bedroom homes sold in another will make it look like home prices are soaring when that really may not be the case.
But that type of thing tends to even itself out as you look at the data for year-to-date. With eight months in the books, those numbers also show that housing prices in Lawrence are continuing to increase. Through August, the median selling price of a Lawrence home is $215,000. That is up 7% from the $201,000 median of a year ago. It is up nearly 20% from the $180,000 mark in 2018.
Lawrence’s home prices are going up this year despite the fact that there are fewer buyers on the market. While sales soared in August, local home sales numbers are still down year-to-date. Agents have sold 855 homes thus far in 2019. That’s down a little more than 8% from the same period a year ago. It also is down about 8% from the same period in 2017. So, home sales haven’t really been robust in Lawrence for two years, but despite that, buyers aren’t getting much of a break on prices. Normally, supply and demand works a bit differently than that.
A prime reason that home prices continue to increase, though, is because there are not that many sellers either. Real estate agents often measure the number of homes on the market by looking at how many months it would take them to sell all of the homes that are listed in a given month, based on the current pace of buying activity. In August, the Lawrence market had 2.9 months worth of homes on the market. Normally, real estate agents like to see five to six months worth of homes on the market at any given time. That is a sign that the market is reasonably balanced and buyers and sellers have roughly equal amounts of leverage. The current climate is giving sellers a lot more advantage in negotiations than buyers.
The situation, though, did improve a bit in August. There were 276 homes on the market in August, up about 9% from the number of listings in August 2018. The 2.9 months worth of supply was up from about 2.4 months of supply in August 2018. But don’t kid yourselves: Sellers still have a big advantage in the market currently. Thus far in 2019, the median number of days a home sits on the market before selling is just 11 days. I don’t even see how that is possible. It takes me longer than that to fumigate the teenagers’ rooms.
Here are some other statistics from the August report:
• Sales of newly constructed homes improved a little bit in August — 11 versus eight a year ago — but are still way off for the year. There have been 72 sales of newly constructed homes thus far in 2019. That’s down 28% from the same period a year ago.
• The median selling price of newly constructed homes has begun to moderate some in 2019. Last year, the price of new homes jumped by 11%. Through August of this year, the median selling price is up less than 1%. The gap between a new home and an existing home in Lawrence, though, is still pretty large. The median selling price of a newly constructed home is just under $342,000. The median price for an existing home is $205,000.
In case you are wondering, it does appear that Lawrence’s market had a much better month than the nearby Kansas City market. Both markets should have benefited from the decline in mortgage rates, but Lawrence’s market responded much better than Kansas City’s.
According to data from the Kansas City Regional Association of Realtors, home sales in the metro area actually declined by 3% percent in August. For the entire year, though, the Kansas City market is performing a bit better than the Lawrence market. Through August, homes sales in K.C. are down by about 4% compared to about 8% in Lawrence. Home prices, though, are increasing at about the same rate in Kansas City and Lawrence, posting a 7% increase in both markets.