It is funny how sometimes pricing data can give you misleading signals about the market. Today we are seeing a monthly average price per square foot across all ARMLS areas & types of $130.18, and on March 18, 2014 the same reading was $130.51. We therefore compute an annual appreciation rate of -0.3% over the last year. This is not a pretty picture for sellers. However the Cromford® Demand Index has increased from 90.8 to 96.5 over the last month while the Cromford® Supply Index has dropped slightly from 82.3 to 82.2 and is starting trend downwards. This is a much more encouraging pair of signals for sellers.
Which signal is more important? The Cromford Indexes are leading indicators so they tell us how pricing will behave in the future. The average price per sq. ft. is a trailing indicator telling us where the market has been, and it has been in the doldrums until the end of January.
Make no mistake, the recent change in market conditions is significant and if it continues in this mode for a while it will surely lead to higher sales prices down the road.