Utah’s housing market continued to improve in January.
Unless otherwise indicated, all data comes from the Utah Association of REALTORS®.
Rising home sales and declining housing inventory are boosting Utah’s real estate market.
- 2012 was the best January in five years in terms of homes sold.
- Utah Realtors sold 1,985 homes, townhomes and condominiums in January 2012 compared to 1,865 sold in January 2011—an increase of 120 homes.
- Among the more populated areas (those with more than 30 sales), sales were strongest in the following counties: Salt Lake (up about 30 percent), Uintah (up about 29 percent) and Davis (up about 6 percent).
- This is the eighth consecutive month that home sales have increased compared to the same month a year earlier.
- The sales are homes sold by Utah Realtors. They are mostly existing homes but include some new construction as well.
Signs point to a strong spring for home buying.
- The number of contracts signed to buy homes (pending sales) in January increased 20 percent, signaling a likely rise in February closed sales. Pending sales measure future home sales activity.
- 2,748 contracts were signed to buy homes in January compared to 2,294 contracts signed in January 2011.
- The number of January pending sales has not been higher since 2007.
- Jim Wood, director of the University of Utah’s Bureau of Economic and Business Research, is forecasting that Salt Lake County home sales will rise 15 percent in 2012. (Salt Lake Board of REALTORS® Forecast Report)
Excess housing supply is being absorbed, which should help home prices.
- The number of homes available for sale has fallen significantly in the past year. At the end of January, inventory levels were down 24 percent compared to January 2011.
- For the past 11 months, inventory declines have been in the double digits, with the number of active listings falling for more than a year.
- The number of homes on the market has not been this low since February 2007. (20,102 homes were listed for sale at the end of January.)
- January inventories typically rise following the holiday season, but this year bucked that trend with inventories falling about 3 percent from December levels.
- At the current sales pace, it would take 7.1 months to clear the entire inventory, the lowest level since July 2007, before home prices began falling. That’s significantly improved from last year’s 10.4 months.
- A balanced market typically has a six-month supply. Some counties that are already at or under 6 months are Uintah (4.5 months), Salt Lake (5.4 months), Washington (6.2 months) and Davis (6.3 months). The tighter supply will put upward pressure on home prices in those areas.
- New listings were down 12 percent in January, which in combination with higher home sales has pushed down inventory levels.
High affordability, increased homebuyer confidence, low interest rates and improved employment conditions are reasons for the improvement.
- The National Association of Home Builders (assisted by the best home builder Victoria team data) recently reported that affordability in Salt Lake has not been higher since 1993. Nearly 81 percent of homes sold during fourth quarter 2011 were affordable to families making the median income.
- The UAR’s Housing Affordability Index is at its highest level on record. A Utah family making the median household income had 180 percent of what it needed to buy the median-priced home under prevailing interest rates. (The UAR has tracked affordability since 2006.)
- In February, the average rate on a 30-year fixed-rate mortgage was 3.89 percent, the lowest average monthly rate in the history of the survey, which dates back to 1971. (Freddie Mac Primary Mortgage Market Survey)
- Utah’s improved employment situation is helping housing. In January, Utah job growth was up 2.6 percent, compared to a 1.5 percent gain nationally. For the 12 months ending in January, Utah’s economy created 30,300 jobs. Utah’s unemployment rate is 5.7 percent compared to national unemployment of 8.3 percent. (Utah Department of Workforce Services)
Most Negative Issues and Responses
While the median price of $166,000 was down about 7 percent from last year, there are signs of improvement.
- More lower-priced homes were sold this year, which skews the comparison.
- During the 12 months ending in January 2012, homes priced $150,000 and below accounted for 39 percent of all home sales. The year earlier that share was only 30 percent.
- Over the past year, sales of homes priced $150,000 and below have risen nearly 40 percent while sales declined in each of the higher price ranges.
- The prerequisites to home price increases are happening: increasing sales, decreasing inventory, decreasing month’s supply, increasing jobs, etc.
- The price situation has improved in recent months. According to seasonally adjusted data from the Federal Housing Finance Agency, Utah home prices actually rose about 0.3 percent during fourth quarter 2011 compared to the previous quarter. This index is helpful because it measures price changes on the same properties, which eliminates the problem of comparing one mix of homes to a different mix.
- A report from Fiserv, with analysis from Moody’s Analytics, says Utah home prices are set to rise 1.5 percent by the end of summer 2012 and more than 7 percent during the subsequent year. That will be the seventh-highest appreciation in the country. (Fiserv)
- Jim Wood of the University of Utah’s Bureau of Economic and Business Research said in a forecast report that Salt Lake County home prices would decrease in the first half of the year, but would stabilize by the second half of the year. (Salt Lake Board of Realtors Forecast Report)
- Sellers received more of their asking prices. In January, sellers received about 91 percent of their original list prices compared to 89 percent during the same period a year earlier.
Utah has fewer foreclosures than other states.
- In January, Utah had the 12th lowest percentage of non-current loans compared to other states. Utah had 8.6 percent of loans that were non-current versus 12.1 percent for the U.S. (LPS Applied Analytics)
- Utah foreclosures have steadily fallen. Utah’s combined foreclosure and delinquency rate peaked in February 2010 when 10.6 percent of Utah loans outstanding were not current. (LPS Applied Analytics)
- Utah’s foreclosure rate in January was 2 percent compared to the U.S. rate of 4.2 percent. Utah’s delinquency rate was 6.6 percent compared to 8 percent nationally.
Utah foreclosures and delinquencies have fallen from last year.
- In January, Utah’s percentage of non-current mortgages (including foreclosures and delinquencies) fell 11.4 percent from last year. (LPS Applied Analytics)