In general, the market took a small step back in the third quarter of 2014, as sales activities were down slightly throughout the region and prices had a difficult time gathering momentum. The spike in activity in 2013 has made a promise that 2014 has not been able to keep.
For the full region, sales activity was down 4.3%, mostly because of the high baseline that was set in 2013. It has become very clear that the surge in 2013’s market activity was somewhat of an aberration that was caused by a late-spring pop in interest rates that drove a lot of frantic activity over the second and third quarters. Now, it looks like that mid-2013 surge of activity “flooded the engine” on the market and caused the recovery to stall for over a year.
Despite the small sales decline coming out of last year, the long-term trends in activity are still going strong. Activity is generally moving in a positive direction overall, outside of the outlying results of last year’s surge.
The longer-term regional pricing trends are also positive, but have mixed results in the individual counties. The appreciation this quarter was mostly due to a 6.6% average sales price increase in Westchester, which spurred small price declines throughout the rest of the region. Although the gains were really only felt in Westchester, market trends tend to flow from New York City outward, so even though regional price increases are limited at the moment to just our highest-priced county, that will likely guide future appreciation throughout the rest of the Hudson Valley region.
Even with mixed results in sales activity and pricing, we saw other signs of a rising seller’s market. Throughout the region, and in each county, homes were selling more quickly and for closer to the asking price than they were a year ago. We are beginning to see days-on-market hitting six months or fewer and listing discounts that are uniformly below 5%, which are levels that haven’t been seen since before the market correction of 2008. If increases in buyer demand are driving quicker sales closer to the asking price, they will likely drive higher activity levels and price appreciation in the future.
Going forward, we are cautiously optimistic that sales and prices will stabilize through the end of 2014. We are approaching the point of the calendar year where the 2013 surge began to fade, so we will not be measuring the market against an anomalous baseline any longer. The fundamentals of the market still appear to be strong, with prices still at very attractive levels for buyers, interest rates that are near historic lows, and increasingly positive economic news. We expect that sales will hew closely to 2013 levels through the end of the year before what we expect will be a healthy spring market that will likely be the beginning of some meaningful and more widespread appreciation in the region.