Is the market downturn just seasonal?
Every real estate market has a seasonal pattern. Especially in the Midwest where we have all four seasons of weather. Historically the sweet spot in our market is early Spring when demand is picking up but the Spring wave of new housing inventory has not hit the market quite yet. When demand exceeds supply, that is when the magic happens.
If you look at the graph below, you can see that this year the sales absorption rate peaked in the first week of April. That is later than usual and was most likely caused by the late winter weather that we received this year.
The funny thing is that as quickly as the market heated up in late March and early April, it appears to have cooled off. Yes some of that is simply seasonality, but there is a difference this year. If you look at last week, the sales absorption rate was 9.2 percent, or in real numbers 65 out of 703 homes went under contract. The last time that the sales absorption rate was that low was back in December 2018.
It is quite unusual to see a sales absorption that low this time of year. Yes we tend to see a drop in demand from the peak Spring season through the rest of the year, but as I said, this year is different. In almost all markets days on market are on the rise and price adjustments are becoming more prevalent.
I will bring you a June update once we close out the month, but for now the atypical downturn in the market has caught our attention.