Madison, Wis. — The sales of existing homes grew rapidly in January, which is putting strong upward pressure on
prices, according to the most recent analysis of the Wisconsin housing market by the Wisconsin REALTORS®
Association (WRA). Home sales in January jumped 10.4 percent over January 2015, and statewide median prices
surged 10.1 percent over that same period, increasing to $148,700.
“The winter is always our slowest season, but this has been an unusually strong winter thus far,” said K.C. Maurer,
WRA board chairman. “We will certainly see home sales pick up as we move into the spring, which signals a strong
real estate market for the first half of 2016 and hopefully beyond.”
Compared to the same month last year, sales were up 10.2 percent in December and 10.4 percent in January. “The
mild winter certainly helped, but this is really just a continuation of the strong pattern seen throughout 2015,” said
Maurer. Every region in the state saw home sales grow between January 2015 and January 2016: the most robust
sales growth occurred in the Northeast, which increased 17.2 percent, as well as the West region, which grew 16.1
percent. Home sales in the Southeast region rose 10.2 percent, followed by the North, South Central and Central
regions, which grew between 5.5 percent and 6.7 percent.
Prices, however, also rose significantly in January, up 10.4 percent over last year. “This is the strongest price
increase we’ve seen since the middle of 2013,” said WRA President & CEO Michael Theo. “We’re seeing a
confluence of a solid state economy but also a very low and falling supply of homes on the market.” Theo noted the
state unemployment rate stood at 4.3 percent in December, compared to a national rate of 5 percent for that month.
However, inventories of homes for sale have dropped to the lowest level since the WRA began tracking inventory
levels at the end of 2009.
“We had just 36,450 unsold homes in January, which is the first time we have seen supply fall below 40,000 units,” said Theo. The absorption rate shows how many months it would take to sell the statewide inventory, given the average monthly sales over the last year. “We’ve got just 5.7 months of unsold inventory, and it’s gotten tighter throughout the state,” he said. Statistics show metropolitan areas of the state have just 4.3 months of supply while rural areas have fallen to 9.3 months of supply.
Increased demand and dwindling supply have hurt housing affordability in Wisconsin, but not as much as expected.
“While it has slipped a little, housing affordability in Wisconsin remains strong due to modest estimated family
income growth and low mortgage rates,” said Theo. The Wisconsin Housing Affordability Index measures the
percent of the median-priced home that a buyer with median family income can afford to buy. This assumes a
healthy down payment of 20 percent with the remainder financed with a 30-year fixed-rate mortgage.
For January, the index was 244, which is down from 268 last January. “With current mortgage rates at just under 4 percent, we’re only about half a percent higher than where rates bottomed out during the housing recession in late 2012,” said Theo.
He noted the Federal Reserve has begun to raise short-term interest rates, and while the pace of the
increase is uncertain, it will eventually put upward pressure on mortgage rates. “These double-digit housing price
increases will eventually take their toll on affordability, so this is an ideal time for buyers to enter the market,” said
Theo, noting that using an experienced REALTOR® is one of the best ways to find the best values in this tight
housing market.
The Wisconsin REALTORS® Association is one of the largest trade associations in the state, representing over 14,000 real estate brokers, sales people and affiliates statewide. All county figures on sales volume and median prices are compiled by the Wisconsin REALTORS® Association and are not seasonally adjusted.
Hat tip Paula Becker