Let's Talk About the August Market: What's Going on with the Real Estate Prices?

As we enter September, it's a great time to reflect on what happened in the real estate market during August. We've seen some interesting shifts, and I want to share what these changes might mean for the weeks ahead.

For the period ending August 15th, the average sales price per square foot across all areas and property types in the ARMLS (Arizona Regional Multiple Listing Service, Inc.) database came in at $281.34. If that seems lower than expected, you're right—it's down 4.2% from the $293.64 recorded on July 15th. While we anticipated a decline, we expected something closer to 2.2%. Instead, the drop was nearly double that, and it fell below our 90% confidence interval. This is the third month in which prices have dipped more than expected. Sellers seem to react more cautiously than necessary, leading to rapid price cuts and high levels of concessions.

?This shift toward a more balanced market can feel unsettling for those accustomed to the seller's market. Some areas—like Buckeye, Maricopa, Queen Creek, Surprise, and Goodyear—are experiencing buyer's market conditions. We're not in a buyer's market yet, and things have been looking up since mortgage interest rates started to dip over the past few weeks.

?As of August 15th, the average list price per square foot for pending listings is $328.37, a 1.4% increase from July 15th. We might see prices start to recover as we move through September. Of those pending listings, 99.2% are everyday transactions, with just a tiny fraction—0.2%—being REOs and 0.7% being pre-foreclosures or short sales. The low level of foreclosure activity indicates that distress isn't the cause of the drop in sales prices.

?The average sales price per square foot on September 15th will be around $288.56, a 3.2% increase from the current level. We're confident (about 90%) that the actual number will fall within a ± 2% range of this mid-point, somewhere between $282.79 and $294.39.

?The last few months have been a bit of a rollercoaster for sales prices—especially after a solid April—but we think the worst of the weakness is behind us. Prices should start to rebound soon, and if that doesn't happen in the next month, we expect to see it by mid-October. The luxury market has been pretty quiet during the summer heat, but it's likely to play a more significant role in driving up the average prices as we move forward.

?Staying informed and flexible is critical to navigating these changing market conditions. Let's watch the trends as we move into September and see where the market takes us next!