MADISON — For the second straight month, Wisconsin’s sales of existing homes failed to keep pace with last year’s sales, which put significant pressure on home prices, according to the most recent analysis of the state housing market by the Wisconsin REALTORS Association.
Home sales in April were 9.7% below the levels of 12 months earlier, while median prices rose 8.3% to $195,000 over that same period. On a year-to-date basis, sales lagged behind the first four months of 2018 by 7.8%, which pushed prices up 6.4% to $184,000. The primary reason for the lower sales and higher prices is the continued weakness in home inventories, which fell again in April.
WRA Chairman Jean Stefaniak said a seller’s market for nearly two years means that if limited home supplies continue, 2018 sales levels may be difficult to match. Six months of supply signals a balanced housing market, and the statewide supply has been under that benchmark since June 2017. The state currently has 4.3 months of supply, which is down from the 4.6 months seen in April of last year.
The only exception was the north region, which had 7.4 months of supply in April, down from 8.2 months a year earlier. Interestingly, that region saw the smallest reduction in sales of all regions in the state for the month of April. The Central region had five months of supply, and all other regions had supply at 4.3 months or lower. Stefaniak said the north region is primarily rural with a significant second home market. There is more inventory in rural areas as well, she added. Counties in metropolitan areas of the state had about half the inventory of rural counties, Stefaniak said.
The number of new listings in April were up 7% compared to April of last year. Still, the total listings in the state are down compared to where they were 12 months ago.
The median price increased 8.3% over the past year, which is approximately four times the rate of inflation. According to the latest estimate from the U.S. Bureau of Labor Statistics, the overall annual inflation rate was 2% in April; and core inflation, which excludes the more volatile food and energy sectors, came in at 2.1%. Statewide home prices began rising in spring 2012, and they have generally exceeded the rate of inflation for nearly that entire time. WRA President and CEO Michael Theo noted that the annual rate of price appreciation has been 6% or higher for eight of the last 12 months.
The Wisconsin Affordability Index shows the fraction of the median-priced home that a household with median family income can afford to purchase, assuming 20% down, and a 30-year fixed-rate mortgage on the remaining 80% of the balance. The index has fallen from 203 last April to 195 in April 2019, which is a decline in affordability of 3.9% over the last year.
