MONROE — After two consecutive months of decline, Wisconsin’s home sales reversed course and increased in May, which pushed home prices up, according to the latest analysis of the existing home market by the Wisconsin REALTORS Association. 

May home sales rose 3.2% compared to May 2018, and the median price was up 9.1% over the past 12 months, rising to $203,000. 

The improvement in May home sales was not enough to move year-to-date sales growth into positive territory, but it did help to close the gap from last year. Specifically, sales for the first five months of 2019 were just 4.3% lower than sales over the January through May period of 2018, and median prices rose 7.9% over that same period to $189,900.

WRA Chairman Jean Stefaniak said in a release from the organization that improvement in sales as summer begins is positive. During a typical month of May, Wisconsin sells about 10.5% of its annual volume, which is second only to June, which accounts for 11.5% of the annual closings on existing homes. In fact, nearly 43% of annual homes are typically sold over the four month period between May and August. She cautioned that even though demand conditions remain strong, weak supply will continue to plague this market until inventories improve. There were just 4.7 months of supply in May, down from 4.9 months 12 months earlier. 

Stefaniak noted that the inventory problem was most severe in the larger urban areas of the state. The U.S. Census classifies metropolitan areas as those cities and their surrounding counties with a population of 50,000 or more. 

Smaller towns and cities and their surrounding counties with a population between 10,000 and just under 50,000 persons are classified as micropolitan areas, and rural counties have fewer than 10,000 persons. 

Specifically, metropolitan counties had just 3.9 months of supply in May, whereas micropolitan counties had 5.1 months of inventory and the small rural counties had 7.8 months of available supply. According to 2017 U.S. Census data, just over 74% of the state population lived in a metropolitan county, whereas 13.4% were in micropolitan counties, and just 12.4% lived in rural areas.

The state managed to add 15,100 nonfarm jobs between April 2018 and April 2019. Strong demand and tight supply leads to home price appreciation well above the rate of inflation. April estimates of headline inflation were just 2%.

The Wisconsin Affordability Index shows the fraction of the median-priced home that a buyer with median family income can afford to buy, assuming 20% down, and a 30 year fixed-rate mortgage on the remaining balance. 

The index stood at 198 in May 2018, and it dropped to 190 in May 2019. With this market so tight, prospective buyers need to work with someone experienced to find the right home.