PHOENIX -- The Phoenix-area housing market is officially in a slump, according to a new report from the W. P. Carey School of Business at Arizona State University.
Though the median single-family home price went up 11 percent from June 2013, the forward price movement has dramatically slowed down from last year, according to the report.
Activity in the market remains sluggish, with single-family home sales down 11 percent from June 2013.
There's a little good news for builders, however. According to the report, builders saw an uptick in new-home sales in June and their highest monthly total of new single-family construction permits in more than two years.
Phoenix-area home prices shot up from September 2011 to last summer, before slowing down and then even dropping a little earlier this year, the report says. Then, this June – after three months of almost stagnant prices – the median single-family-home price rose to $211,000. That's up 11 percent from $190,000 in June 2013. However, the report's author says we're not likely to see much more forward movement for a while.
"We're in an 11-month slump in demand; sales were very low in the spring," said Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. "There are a few positive signs that demand may gradually start to recover during the second half of this year, but we are unlikely to see much help for pricing until 2015 because there is always a long delay – typically nine to 15 months -- between any change in the market and the resulting change in pricing. Meantime, we may see a little downward correction, not a bubble bursting, as some have predicted."
While sales of luxury homes continue to do OK in this market, demand for other categories remains weak. Sales of single-family homes and condos were down 11 percent from June 2013 to June 2014.
Fewer investors are focusing their attention on the Phoenix area now that better bargains can be found elsewhere. The percentage of Phoenix-area residential properties purchased by investors dropped from the peak of 39.7 percent in July 2012 to 14.4 percent this June, which is around the norm.
"We are finally seeing a change in the trend of low household formation," Orr said. "The nation saw some improvement in the second quarter of 2014. This means more people may be moving out and renting or buying their own homes."
Still, the supply of homes available for sale, especially at the lower end of the market, remains slim, the report shows. Active listings (excluding homes already under contract) fell 5 percent during June. Also, new foreclosures aren't broadly becoming available to create new supply. Completed foreclosures went down 35 percent from last June to this June.