Two new reports show slow improvement is being made in the East Valley's new and existing home markets.
Home sales increase, median price down
Housing market may be changing course
Last month, new-home construction permits reached 1,018 across the Valley, the highest total in the last six months, according to the latest Phoenix Housing Market Letter by analyst RL Brown.
"That's the best news we've had for some time," he said. "We've seen a steady climb of permits, and that's good news, and we've come a long way from the 248 permits we saw in February. That tells us the speculative inventory (of new homes) is coming under control, and that means that future sales of new homes, future orders, will have to be built. That's the stimulus that we've been looking for."
The ongoing rise in new home construction permits will lead to increased hiring in construction trades, Brown said.
"Our expectation of a normal market in this town is probably somewhere in the upper 40,000s to lower 50,000s (permits per year), so obviously we're a long way from that," he said. "We've got a long way to go, but we've come a long way and the trend is the most significant thing."
New home sales in June were roughly identical to the previous month, while the median new home price was $190,000, up slightly from $188,837. New home prices have remained flat for the last three months after falling over the last year, Brown said.
"The new home prices ... have pretty well stabilized, and that's also a good sign," he said. "That just adds to the positive outlook. That gives us additional optimism about the overall market future."
Remaining speculative inventory still is being heavily discounted to compete with foreclosures, while new inventory is not being discounted, Brown said.
"That's a sign that those new products are more in tune with what the market opportunity is," he said.
As for the existing home market, the latest Arizona State University-Repeat Sales Index shows a 35 percent drop in average Valley home prices from April 2008 to April 2009. That's down from the 37 percent drop in prices from March 2008 to March 2009.
And preliminary estimates show prices dropped 33 percent from May 2008 to May 2009, and 31 percent from June 2008 to June 2009.
April is the first month with a slower rate of annual decline, said Karl Guntermann, a real estate professor at the W.P. Carey School of Business at ASU.
"The other positive is the median price in April was $117,000, down from $119,000 in March, and the preliminary median price for May is also down, at $115,000, but the preliminary median price for June is $119,000," he said. "So for the first time the median price has gone up. That's preliminary, but that tends to be a fairly good indicator."
This is the first month that Gilbert has been included in the report's breakdown of cities, and it showed the mildest decline in the area between April 2008 and April 2009.
The south East Valley showed a 28.4 percent drop in prices from April 2008 to April 2009. Among south East Valley cities, Chandler dropped 26.2 percent, Gilbert dropped 20.9 percent and Mesa dropped 32.5 percent.
"Foreclosures are still a dominant factor in the market," Guntermann said.
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