Published 29 October 2018
LAS CRUCES – According to an Oct. 11 report from the Las Cruces Association of Realtors, local brokers sold 160 new and existing homes, town homes and condominiums during September. That’s a 43-unit, or 21.1 percent, reduction from August.
The decline in sales was not unexpected, as the number of closed sales typically begin to wane as our market transitions into the fall and winter selling seasons. Statistics indicate that approximately 56 percent of local sales take place during the spring and summer months, with the remaining 44 percent closing during the fall and winter seasons.
The number of pending sales, which totaled 320 in July, has also been declining for the past two-plus months. As of this writing, the number stood at 224 units. A sale is considered pending after the purchase agreement has been signed and before the transaction closes. Pending sales tend to lead closed sales by approximately two months.
While the $197,575 average price for the 160 units sold in September was 2.6 percent below August’s $202,757 average sales price, it was 6.2 percent above the $186,080 sales price posted in September 2017. The overall average sales price for the 1,616 homes sold during the first nine months of this year settled in at $203,173. That number is the fourth-highest on record, bested only by the $215,591, $222,147 and $218,016 average sales prices posted in 2006, 2007 and 2008, respectively.
If this year’s closed-sales statistics follow past trends, the 1,616 homes sold through September should represent 75.7 percent of this year’s total number of closed sales. By my fuzzy math, that would be a year-end total of 2,135 units. That number is just one unit shy of the units closed in 2005, which was the second-highest number of sales ever recorded in our area. The highest number of closed sales on record, 2,303 units, was achieved in 2006.
One of the main differences distinguishing this year from prior years is the impact of higher interest rates. Freddie Mac announced on Oct. 11 that the rate for a 30-year fixed-rate mortgage rose 19 basis points (nearly one-fifth of a percent) to 4.90 percent. Rates are “expected to top 5 percent by the end of the year,” according to Bankrate.com.
What will such increases mean for future homebuyers? The difference between the monthly principal and interest payment on a $150,000 loan at 4.9 percent and 5.5 percent, which is the rate projected for 2019 by longforecast.com, is $56 ($796 to $852). Buyers who wish to spend no more than 30 percent of their gross income on their house payment will have to earn an additional $2,240 per year to maintain their debt ratio. Perhaps that’s a good enough reason to buy now, rather than later.
See you at closing.
Gary Sandler is a full-time Realtor and president of Gary Sandler Inc., Realtors in Las Cruces. He can be reached at 575-642-2292 or Gary@GarySandler.com