Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.
For the monthly period ending May 15, we are currently recording a sales $/SF of $142.50 averaged for all areas and types across the ARMLS database. This is up 1.8% from the $139.96 we now measure for April 15. Our forecast range midpoint was $141.77, with a 90% confidence range of $138.03 to $144.61, so last month’s forecast proved to be reasonably accurate.
On May 15 the pending listings for all areas & types shows an average list $/SF of $145.07, 1.0% above the reading for April 15. Among those pending listings we have 92.7% normal, 2.5% in REOs and 4.9% in short sales and pre-foreclosures.
Our mid-point forecast for the average monthly sales $/SF on May 15 is $143.93, which is 1.0% higher than the May 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $141.05 to $146.81.
In most years, prices make a lot of progress between March and June so we think 2 months of strong advance from April 15 to June 15 is a very reasonable expectation. We also expect a retreat to occur between June 15 and September 15, because this is a seasonal pattern that occurs almost every year.
This commentary was provided by Michael Orr of the Cromford Report. Michael Orr is the Director of the Real Estate Center at the W.P. Carey School of Business at Arizona State University.