Despite a dip in home sales in December, residential sales continue at a steady pace during the fourth quarter in the Southern Maryland region. For the second quarter in a row, average and median prices grew by 5.8 and 4.0 percent respectively as compared to the same time in 2016.
“Overall, we are encouraged by the number of sales in fourth quarter notwithstanding the 7.1 percent decline in December,” said SMAR President Kathy Suite. “Average and median prices appreciation kept pace with the gains in the third quarter,” she added. Suite went on to note, “we expect that 2018 will continue the trend of a stable residential market in the Southern Maryland region.”
Monthly housing statistics for Southern Maryland are compiled by data as reported by MRIS. For the purposes of this report, “units” are defined as the closed sales and “pending units” are properties under contract. Months of inventory are based on the current active inventory and monthly sales for the corresponding month.
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The number of homes sold are those that have sold and gone through settlement---in effect the transfer of ownership has taken place. There has been a trend since the summer of 2015 of increased sales across the state and more specifically in the Southern Maryland region. This trend held for both October and November with increases of 4.0 and 11.8 percent. However, in December there was a decline of 7.1 percent. The fourth quarter ended with a 2.2 percent rise in home sales from the same quarter in 2016.
While the market has reached equilibrium with the number of units sold, the market in Southern Maryland continues to see adjustment in terms of average price. In the fourth quarter however, there were steady increase in prices in all three quarters ranging from 1.4 percent to 9.9 percent. Overall, there was a respectable increase in average price of 5.8 percent in the fourth quarter of 2017 as compared to the same quarter in 2016.
Because the median price is the number that is in the middle of all values, it can be greatly impacted by wild fluctuations in prices overall especially in counties with small numbers of units sold. The data for median prices closely mirrors the numbers for average prices. All three months in the quarter posted increases in median prices from 0.3 to 6.8 percent. In the Southern Maryland area during the fourth quarter, the simple average increased overall by 4.0 percent between 2016 and 2017.
Pending units are defined as homes under contract but have not yet achieved settlement. In October and December, there was no change in pending units as compared to 2016. In November there was a 4.9 rise in pending units. In comparing the average for 2017 versus the same time in 2016, there has been an increase of 1.7 percent in the fourth quarter.
Active inventory represents the number of homes that are currently on the market. The number of homes on the market for the fourth quarter of 2016 was 659, which declined by 9.5 percent to 597 homes during the fourth quarter of 2017. For counties with a significant backlog of inventory, this decrease is a good sign. It means that buyers are clearly engaged in the market and this is further confirmed by the steadily growing number of homes sold in the second quarter of 2017. However, if active inventory drops too low it will impact consumer choice and may make buying a home difficult.
Months of Inventory
Months of inventory is another way to measure the well-being of a local market and is closely tied to active inventory. Overall, six months of inventory is generally considered to be the gold standard for a healthy real estate market. During the fourth quarter of 2016 months of inventory in Southern Maryland was 4.5 months. By the fourth quarter 2017 months of inventory stood at 3.9 months---which is below the ideal but still an indicator of a robust market.