Thursday, September 1, 2022 / by Bryan Baylon
The average monthly change in CMI was -15%. This is another improvement on the week before when the reading was -20%. Although we are still seeing a deterioration for sellers over the last month, most of that happened in the first two weeks (that is, the first half of August). The deterioration has slowed markedly during the second half of August and CMI readings are falling much less quickly now. The decline over the last week was only 1.2%. We also have our first city showing an improvement for sellers over last month - Paradise Valley. Carefree also looks healthier, but is far too small an area to generate the numbers we can use to create a CMI.
Only 4 cities remain over 100. They are all relatively expensive parts of the market and all in the Northeast Valley.
If we focus on the change in CMI over just the past week, then a few other cities edged higher:
- Scottsdale up 1%
- Chandler up 2%
- Tempe up 0.1%
Falling most in the last week were Goodyear and Avondale, both down 4%.
The luxury market remains under-supplied and although the market is far weaker than it was 6 months ago, it remains healthy because there is less supply than demand, even with the much higher mortgage rates. It is also true that the very low-end of the market has weak supply so prices are firmer for the few homes still under $300,000.
It is the mid-range between $300,000 and $1.5 million that is seeing the most difficult conditions for sellers, particularly in the more-far-flung areas where new homes are available in larger volumes. The weakest markets are in Buckeye, Maricopa and the San Tan Valley. The latter area has no consistently defined boundaries with subdivisions being incorporated into the town of Queen Creek one by one. For this reason, we include San Tan Valley in Queen Creek for statistical purposes. To do otherwise would introduce statistical errors we cannot tolerate.
Supply is only rising slowly and is even falling in a few areas. Demand remains weak, but has picked up over the past three weeks. It remains sensitive to interest rate changes, so this revival in demand could easily peter out if rates jump higher again.
Overall, the picture is less gloomy at the start of September than we expected at the beginning of August. For that we can all be thankful.
Market insights provided by The Cromford Report.