WASHINGTON, DC HOUSING REPORT APRIL 2001 The Market Overall Total residential housing sales declined in April from March and also from the April figures of the prior two years. New contracts for single family homes, condominiums and cooperatives in April were 12% below those in April of a year ago and 7% below those in April of 1999. The total number of new residential contracts in April was also 5.5% below that of March 2001. In this case the decline was caused solely by a drop in single family sales while condominiums and cooperatives registered a modest gain over the prior month. These sales declines may be partially accounted for by a shortage of inventory in some price categories, but overall these declines occurred at a time when the total inventory of properties for sale showed their first gains of the year. In other words, sales fell relative to last month and the last two years, but the number of available properties increased. This would indicate at least a temporary slowing of the housing market. Average sales prices, which had increased during the first quarter of the year, showed a modest decline on the single family side in April and held pretty much even for condos and coops. As we noted last month, this year's early price gains appear to have been influenced by the unusually large number of higher-end settlements in the first part of the year. It will probably take us until the end of the second quarter to get a more accurate price picture. Single Family In April, new contracts for single family homes fell nearly 11% from the very strong numbers posted in March but they also declined 15% from May of a year ago and 5% from May of 1999. Loses were highest (40% compared to last April) for homes priced under $150,000 (34% of the month's sales market) where the number of sales almost equaled the number of new listings. Sales also declined, compared to a year ago, for homes priced from $300,000 to $450,000 (15% of the market) and over $750,000 (7% of the market). Four months into the year, sales have fallen 5.5% behind the same period of a year ago but they exceed the same periods of 1999 by 5.5%, 1998 by 13% and 1997 by 61.5%. Sales gains so far this year have occurred in all price ranges except those at $150,000 and below and $300,000 to $450,000. It is worth noting, however, that sales in the $150,000 and below price category have exceeded the number of homes coming on the market this year. This supply problem is caused at least in part by escalating prices that have pushed more of these primarily starter homes into the next higher price bracket. At the end of April, the number of homes for sale had increased by nearly 15% over the prior month, which is the first real gain in a very long time. This is in part the result of new product and in part the result of slowing sales. But historically, the inventory is still at near record lows with an effective inventory entering May of only 1.9 months compared to the 11-year low registered a month ago of 1.49 months. Only three years ago this figure stood at 4.2 months. Average sales prices, which had shown a 15% increase in the first quarter over the annual level of 2000, showed a 2% decline in April while the median sales price has remained even with 2000 throughout the first four months of this year. Again, we will probably have a better picture of what is happening to prices when we get to the end of this second quarter in June. Condominiums and Cooperatives In April, new contracts for condominiums and cooperatives increased by 6% over March but trailed the stronger April performances of 2000 and 1999 by 5% and 17% respectively. This April did show a gain of 7% over the same month of 1998 and 57% over April of 1997. Sales this month were down in comparison with each of the last four years for units priced below $150,000 while strong gains were registered by units priced over $200,000 where new contracts nearly equaled the number of new units coming on the market. It may well be that the group of units priced under $50,000, which suffered a 71% decline from a year ago, will never fully recover as fewer and fewer units are now priced this low. Even with a slightly down month in April, year-to-date sales are nearly 2.5% ahead of the same period last year, 16% ahead of 1998 and 59% ahead of 1997; however, they trail the first four months of 1999 (the record-setting year of the 1990's) by 7%. As with the April figures, sales so far this year are down by 25% from last year for units priced under $150,000 while they are up by 37% for units priced over $200,000. The inventory of units for sale has grown in each of the last two months and is now 37% ahead of the eleven-year low total at the end of February. Even so, the effective inventory at the close of April was only 1.3 months which is still one of the lowest of the last 11 years. Average and median sales prices, which had increased 28% during the first quarter over the annual 2000 level, remained virtually the same in April. As with single family homes, we should have a much clearer price picture by the end of this quarter. Prepared by Peter Clute and Fred Kendrick, PARDOE Real Estate ERA Data from the Greater Capital Area Association of Realtorsâ and MRIS May 10, 2001