The Sussex County housing market surged again in the second quarter of 2016, with sales up significantly even while prices continued to struggle.
Sales. Sussex sales were up sharply in the second quarter, rising 23% from last year and finishing the year up over 26%. This continued a trend that we’ve been watching for the past four years, with year‑on‑year sales up almost every quarter since 2012. Indeed, Sussex closings are now reaching levels that we have not seen since the tail end of the last seller’s market, with sales now up about 80% from their 2011 bottom. So the market is in much stronger shape than it has been at any time since the 2008‑09 market correction.
Prices. This spike in sales, though, has not yet had an impact on pricing, which has deteriorated even while buyer demand increased. Average and median sales prices were down again in the second quarter, falling almost 2% on average and at the median. For the year, prices are down even more, falling about 4% on average and at the median for the rolling year. It takes time for increases in demand to drive pricing changes, so we believe this will turn around if buyer demand remains at its current levels.
Inventory. The “months of inventory” indicator measures how long it would take to sell out the existing inventory of homes at the current rate of home sales. In the industry, we generally consider anything below 6 months as a signal for a seller’s market, where tight inventory leads to multiple offer situations, bidding wars, and ultimately appreciating prices. Sussex inventory remains well above that threshold, at 12.4 months, but that’s down over 26% from last year.
Negotiability. The negotiability indicators – the amount of time sold homes were on the market, and the rate at which sellers were able to retain their full asking price – were a little mixed. The days‑on‑market fell over 11%, indicating that homes were selling more quickly. But the listing retention rate fell, signaling that sellers were having difficulty getting buyers to accept their listing price.
Going forward, we believe that Sussex is poised for better things. Buyer demand has been strong for almost four years now, which is bound to eventually have a positive effect on prices. With an improving economy, homes priced at attractive levels, and near‑historically low interest rates, we expect buyer demand to stay strong through a robust summer market.