Mirroring a statewide trend, home sales dipped in March across south central Wisconsin.
According to the Wisconsin Realtors Association, sales dropped markedly in Sauk (15.1%), Columbia (22.4%) and Dodge (12.2%) counties last month when compared to March 2018. Statewide, sales fell 14.1 percent. Nationwide, sales fell nearly 5 percent.
“The bitter temperatures and heavy snowfall likely slowed buyer traffic in January and February, which contributed to fewer closed sales in March,” WRA Chair Jean Stefaniak said. But she blamed most of the slowdown on the sparse supply of homes for sale.
The median sale price was up and down in the region. Columbia County saw its median sale price drop nearly 13% to about $180,000 but Dodge County saw its median price surge 13.5% to nearly $150,000 when compared to March 2018. The Sauk County median inched up 2.7% percent to nearly $190,000. Statewide, the median price rose 6.3% to $185,000.
“The economy is in good shape, and that puts a lot of pressure on a housing market with limited supply,” Stefaniak said.
The first-quarter picture was a bit brighter, with home sales down 7.4 percent, relative to the first quarter of 2018, and the quarterly median price up 5.5 percent to $179,300 over the past year.
“With this level of price pressure, we would expect to see a significant erosion in housing affordability,” WRA President Michael Theo said. “Luckily a slight reduction in mortgage rates, combined with moderate growth in family income, has helped keep Wisconsin housing relatively affordable.”
The National Association of Realtors reported Monday that home sales fell 4.9% to a seasonally adjusted annual rate of 5.21 million, down from 5.48 million in February. The drop followed an 11.2% gain the previous month, the largest in more than three years.
Home sales are struggling to rebound after slumping in the second half of last year, when a jump in mortgage rates to nearly 5% discouraged many would-be buyers. Spring buying is so far running behind last year’s healthy gains: Sales were 5.4% below where they were a year earlier.
Most analysts expect sales to rebound in the coming months. Borrowing costs have since fallen back to an average of 4.2% on a 30-year fixed mortgage. And solid hiring is pushing employers to pay higher wages, making it easier for more Americans to afford a home purchase.
Applications for mortgages to purchase homes have been running at a healthy pace in recent months, evidence that final sales should pick up in the coming months. Demand remains strong, with homes on the market for an average of 36 days in March, down from 44 in February.
“We look for a combination of strong demand and lower mortgage rates to support modest growth in sales over the balance of the year,” said Nancy Vanden Houten, senior U.S. economist at Oxford Economics.
Still, a split in the market has emerged, thanks partly to the Trump administration’s tax cut law. Sales increased slightly among mid-priced homes but fell sharply among homes priced at $1 million or more.
Lawrence Yun, chief economist at the NAR, said that the tax changes have limited the ability of wealthier homeowners to deduct mortgage interest payments and property taxes. That’s discouraging sales of more expensive homes.
Developers have built more expensive homes in recent years while pulling back from cheaper properties, even as middle-income Americans are eager to buy.
“The lower-end market is hot while the upper-end market is not,” Yun said.
Properties valued at $100,000 or less, mostly condos, also saw a sharp drop in sales, though that reflects a lack of available homes at that price point. The slowdown among higher-priced homes has occurred because of weaker demand.
Sales fell in all four major U.S. regions, with the biggest decline occurring in the Midwest. That may have partly reflected the impact of massive flooding in Iowa, Missouri and Nebraska last month.