WASHINGTON, DC HOUSING REPORT MAY 2001 The Market Overall Residential housing sales reached their highest level of the last eleven months in May. New contracts for single family homes and condominium/cooperative units jumped 22% from April to May with strong gains over the prior ten months as well. But even this significant level of performance was unable to match the record-setting pace of May of 2000, with the result that overall sales show a 3% decline from a year ago. For the year-to-date, total residential sales are off 2% from the first five months of 2000, but this loss is accounted for solely by a modest decline in new single family contracts while condo/co-op units registered a small gain. Sales continue to be strongest for the more expensive homes and units and slowest for those in the lower price ranges, which is in a fairly direct correlation to where the supply of new homes and units is coming into the sales market. Compared to earlier year-to-date figures, this year is 1% ahead of a very strong 1999 performance, 13% ahead of 1998 and 58% or more ahead of the earlier years of the 1990s. The inventory of properties for sale dropped 6% from the end of April, largely because of the strong sales in May. The overall effective inventory of residential properties stands at only 1.3 months, the lowest point of the last eleven years. Average sales prices, which increased during the first quarter of this year -- largely as a result of an unusually high volume of upper bracket properties that settled during this three month period -- have remained virtually constant over the last two months, with a small decline on the single family side. Single Family New contracts for single family homes climbed back over the 500 level in May for only the second time this year and only the fourth time since January of 2000. In perspective, this 500 sales in a month level has been achieved only one other time going back to this report's inception in 1990. May sales did fall nearly 3% below May of 2000's all time high but exceeded the May's of 1999 by 10%, 1998 by 48% and 1997 by 60%. Five months into this year, sales have fallen behind last year's pace by 4% although they are ahead of the same period of the prior three years by margins of 6% to 55%. For both the month of May and the year-to-date, the level of sales has declined in the 15% to 20% for homes priced under $150,000 and between $300,000 and $450,000 which together make up 54% of the current market. Sales have been particularly strong for homes priced over $450,000 with gains ranging from 20% to 55% over a year ago, although sales could begin to decline in the $750,000 to $1,000,000 range as inventory in this area has declined by 33% so far this year. The inventory of homes for sale is down 19% from a year ago and is at the lowest point of the last eleven years. This inventory loss has hit hardest at homes in the lowest price range (under $150,000) which is off 43%, and also the $750,000 to $1,000,000 range as noted before. It may be that there will not be an inventory rebound in the lowest price range as increases in home values shrink the number of homes available here and buyers are more able to move into the next price range. The effective inventory at the end of May stands at 1.57 months, the second lowest level of the 1990's. During the first three months of this year, average sales prices of settled homes increased by 15.5% over the year of 2000. During the last two months average prices somewhat reversed that trend declining by 3%. The median price, which has remained fairly level over the last several years, is up 2% over 2000 and 4% over the first quarter of this year. Taken together these two price indices indicate a considerable degree of price stability for single family homes over the last two months. Condominiums and Cooperatives Sales of condominiums and cooperatives in May jumped 26% from April and posted the second highest total since 1990 (second only to May of 2000). May sales, however, were 4% below May of 2000's record total but led the May's of 1999 by 3%, 1998 by 34% and 1997 by 113%. May has traditionally been a strong month for condo and co-op sales with the May's of 1999 through 2001 registering the three highest monthly totals since 1990. For the year-to-date, condo and co-op sales are 1% ahead of last year's totals, 7% behind 1999 and ahead of the years of 1990 to 1998 by margins of 20% to 153%. As has been the trend since January, units priced below $150,000 are showing losses in the 13% to 34% range compared to last year and losses of 29% to 57% compared to 1999. Condos and co-ops priced at $150,000 and above are showing gains over the last two years, particularly units between $400,000 and $500,000 which are performing 133% ahead of last year and 153% ahead of 1999. The inventory of condominium and cooperative units for sale fell 18% from April and is 31% below the same point last year with lower priced units hardest hit by lack of inventory. Units priced under $150,000 (53% of current listings) have 50% less inventory than a year ago, while units priced over $300,000 (22% of current listings) show a gain of 83% over last year's level. The effective inventory at the end of May stands a 0.83 months, the lowest point of the last eleven years and only the second time this number has fallen below one month. The average price of condos and co-ops settled through five months of 2001 is 28% ahead of 2000 while the median price is 30% ahead. These prices, however, have remained level since the end of the first quarter. While much of this year-to-date increase can be attributed to growth in home values, there has been a decided increase in settlements of higher-priced units in the first five months of the year. Settlements of condos and co-ops priced above $300,000 (19% of total settlements) are 123% ahead of last year's pace. Prepared by Peter Clute and Fred Kendrick PARDOE Real Estate ERA June 11, 2001 Data from the Greater Capital Area Association of Realtors