Be sure to check out the entire Fourth Quarter Market Watch report here for an in-depth look at the strength of our markets.
2018 began with virtually every market our company serves experiencing sales decreases in single family home sales versus the first quarter the prior year, a notable trend considering it had been several years since we observed a similar phenomenon. Yet the year painted a more positive picture by the time it reached its conclusion. Many of our markets climbed ahead of 2017 by year’s end, while others trailed only slightly behind. When declines occurred, they were modest. Our Westchester and Fairfield County markets saw modest decreases in unit sales and dollar volume, while the Connecticut Shoreline saw minimal decreases in unit sales even as dollar volume improved. Litchfield and Berkshire Counties experienced sales growth and the Farmington Valley was flat with steady sales.
There was much speculation in the media throughout the year on the reason for reduced sales levels in certain markets. We often heard that tax reform was the culprit, and while we acknowledge that uncertainty surrounding the tax bill may have played a role, we maintained the position all year long that it was too early to draw conclusions. It’s only this year that we may begin to understand the full effect, if any. We will continue to follow this factor closely, but for now, observable economic data continues to support a healthy outlook for real estate.
One interesting recent development is the drop in mortgage rates, which are averaging about 4.51% for 30-year fixed mortgages, down from the highest rates in over seven years reached last fall at almost 5%. According to an article in The Wall Street Journal on January 7, the current rate reduction may be spurring some buyers into the market who see an opportunity. Other economic indicators provide further reason for optimism. The Labor Department jobs report in January pointed to strong job growth with a still low unemployment rate of 3.9%, while Federal Reserve interest rates remain at historic lows despite incremental increases. The stock market has demonstrated some volatility, and the GDP is projected to come in a little lower in the fourth quarter than the prior two at around 2.8%, a slower but still good pace. Yet consumer confidence is still soaring at incredible heights, with the Conference Board Consumer Confidence Index reporting consistently elevated levels every month of the year. In December, consumer confidence stood at 128.1 (1985=100). When consumer confidence is this healthy, we typically see demand in the real estate buyer pool follow suit.
In Westchester County, 2018 was a year of modest declines in single family home sales versus the prior year, a consistent trend seen in each quarter compared to the same quarters in 2017. In the fourth quarter, the county as a whole was down 6% in unit sales compared to the same time last year, and dollar volume decreased by 7%. For the calendar year, sales decreases in units for the county amounted to 5%, while dollar volume was lower by 4% compared to the year before. In the southern county, unit sales and dollar volume for the fourth quarter were each 8% behind the same period last year. For the calendar year, unit sales were lower by 4% and dollar volume by 3% compared to the year 2017. Northern Westchester had its best quarter of the year in the fourth, with unit sales decreasing by 2% and volume 5% versus the fourth quarter of 2017. Those decreases were larger in other quarters, leaving the region for the calendar year 6% behind 2017 in unit sales and 7% behind in dollar volume.
Fairfield County has experienced moderate declines in the real estate market each quarter this year compared to the same quarters of 2017. In the fourth, the market had its best quarter of 2018 in unit sales, with units just 1% lower than the same time last year. Yet dollar volume saw a larger decline at 10%, and the quarterly median selling price also witnessed a drop of 5%. For the year as a whole, unit sales finished up behind the calendar year of 2017 by 2%, while dollar volume was behind by 4%. The Connecticut Shoreline, comprising New Haven, Middlesex and New London counties, pulled back a bit in the fourth quarter after experiencing mid-year gains in the second and third quarters. Unit sales in the fourth quarter of 2018 compared to the same period in 2017 decreased by 3%, while dollar volume decreased by 5%. For the year, the region stood behind the calendar year of 2017 by a modest 2% in units but climbed ahead in dollar volume by 3%, an indication of more movement this year in the upper price tiers, further supported by a 3% rise in the 12-month median selling price.
In Litchfield County, sales activity continued through the end of the year as the county experienced its third straight quarter of sales growth versus the same quarters of 2017. For the year, the county came out ahead of 2017 with unit sales increasing by 6% and dollar volume by 4%. In the fourth quarter of 2018, units stood 8% and volume 3% higher than the same time last year. Over in the Farmington Valley region of Hartford County, comprising Avon, Canton, Farmington, Granby and Simsbury, plus the key additional communities we serve including Burlington, Hartland and West Hartford, the residential real estate market ebbed and flowed throughout 2018: It started slow, caught up to the prior year in the second quarter, pulled back again in the third and climbed forward once more in the fourth. The net result was a market that finished completely flat year over year, with unit sales and dollar volume virtually the same in 2017 and 2018. For the fourth quarter, units increased by 3% and volume by 4% versus the same time last year.
In Berkshire County, after a soft start to the year and then two hot quarters that found the residential real estate market leaping ahead of 2017, the market was more tempered in the fourth quarter. In the end, the year saw unit sales increase ahead of the calendar year of 2017 by 3%, and dollar volume was flat. For the fourth quarter, units were again ahead by 3%, but dollar volume fell behind the same quarter last year by 16% as the median selling price dropped by 19%, and lower priced property sales in the central part of the county took center stage.
I hope you find this report informative on what’s happening in your market, and invite you to contact one of our sales associates if we can help you with any of your own real estate needs.
Paul E. Breunich
President and Chief Executive Officer
William Pitt – Julia B. Fee Sotheby’s International Realty