The Sussex County housing market surged again in the third quarter of 2016, with sales up sharply and some modest appreciation in pricing.
Sales. Sussex sales were up again in the third quarter, rising 9% from last year and finishing the year up over 23%. 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, Essex 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. These sustained increases in buyer demand are finally having their expected impact on pricing. Average and median sales prices were both up in the third quarter, rising 0.3% on average and over 5% at the median. For the year, prices were down almost 3% on average and almost 1% at the median, but the trend was welcome. It takes time for increases in demand to drive pricing changes, so we believe this trend will continue 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 six 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 months, but that’s down almost 32% 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 – both supported the idea that sellers were gaining negotiating leverage with buyers. The days‑on‑market fell by three days, indicating that homes were selling more quickly. And the listing retention rate rose to over 95%, signaling that sellers were finding it a little easier to get buyers to agree to their list prices.
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 eventually drive modest but meaningful price appreciation in 2017.