Existing Homes in May: Stronger Sales, Moderating Price Gains

There were some healthy signals from thernexisting home market in May, as sales rose strongly and price growthrnmoderated.  The National Association ofrnRealtors® (NAR) said all four regions of the country experienced a month-over-monthrnimprovement in sales but prices fell slightly in the Northeast.  </p

Sales of existing homes, condos, andrncoops rose 4.9 percent to a seasonally adjusted annual rate of 4.89 millionrnunits in May, the largest month-over-month gain since August 2011.  Despite the strong showing the May rate wasrnstill 5.0 percent lower than the 5.15 million pace one year earlier.  NAR revised its original figures on Aprilrnsales upward from 4.65 million to 4.66 million.</p

Single-family home sales rose 5.7rnpercent to a seasonally adjusted annual rate of 4.30 million in May from 4.07rnmillion in April, but remain 5.7 percent below the 4.56 million pace a yearrnago. Existing condominium and co-op sales in May were at a seasonally adjustedrnannual rate of 590,000, the same figure as for both April and for May 2013.  </p

Lawrence Yun, NAR chief economist credited several factors for thernrebounding market coming out of a weak first quarter. “Home buyers arernbenefiting from slower price growth due to the much-needed, rising inventoryrnlevels seen since the beginning of the year,” he said. “Moreover, sales werernhelped by the improving job market and the temporary but slight decline inrnmortgage rates.” </p

The median existing-home price for all housing types in May was $213,400 a 5.1rnpercent gain from the median in May 2013. rnThe annual increase in April was 5.2 percent.  The May number continues the downward trendrnin appreciation from the double digit increases which were common lastrnyear.  In May 2013 the annual increasernwas 11.0 percent and during the first three months of 2014 the average increasernin the median price was 8.6 percent.   </p

The single-family home price rose 4.9 percent from one year earlier to arnmedian of $213,600.  The median existingrncondo price was $212,300 in May, which is 6.6 percent higher than a year ago.</p

Total housing inventory at the end of May climbed 2.2 percent to 2.28rnmillion existing homes available for sale, a 5.6-month supply at the currentrnsales pace.  There was a 5.7 month supplyrnin April. Unsold inventory is 6.0 percent higher than a year ago, when therernwere 2.15 million existing homes available for sale.</p

Earlier this month, NAR reported that the construction of new homes isrninsufficient to meet demand in most of the country and some areas could facernpersistent housing shortages and affordability issues until constructionrncatches up with local job creation.  Yunrnreferred to this, saying “Rising inventory bodes well for slower price growthrnand greater affordability, but the amount of homes for sale is still modestlyrnbelow a balanced market. Therefore, new home construction is still needed tornkeep prices and housing supply healthy in the long run.” </p

Distressed homes sales accounted for 11 percent of May sales compared to 18rnpercent a year earlier.  Eight percent ofrnsales were foreclosures which sold at an average discount of 18 percent and 3rnpercent of sales were short sales which were discounted an average of 11rnpercent.</p

The percent share of first-time buyers continued to underperform,rnrepresenting less than one- third of all buyers at 27 percent in May, down fromrn29 percent in April; they were 29 percent in April 2013.  The investor share declined to 16 percent fromrn18 percent in April and in May 2013. rnSixty-eight percent of investors paid cash in May and cash salesrnaccounted for 32 percent of all transactions.</p

NAR President Steve Brown said housing fundamentals are showing slightrnimprovement in markets across the country. “Many potential buyers were left onrnthe sidelines beginning last summer as affordability declined amidst risingrnhome prices and interest rates.  Therntemporary pause in rising interest rates and more homes for sale is good news -rnespecially for first-time home buyers – who likely have a better chance inrnupcoming months to make a competitive offer that’s in return accepted by thernseller.”</p

Homes were on the market a median of 47 days in May, one day less than inrnApril but longer than the 41 day marketing time in May 2013.  Short sales took a median of 125 days tornclose, foreclosures 57 days, and non-distressed homes 44 days.  Forty-one percent of homes sold in May werernon the market for less than a month.</p

Regionally, existing-home sales in the Northeast rose 3.3 percent to anrnannual rate of 620,000 in May, but are 3.1 percent below a year ago. The medianrnprice in the Northeast was $256,700, down 0.9 percent from May 2013.</p

In the Midwest, existing-home sales jumped 8.7 percent to an annual rate ofrn1.13 million in May, but are still 7.4 percent below May 2013. The median pricernin the Midwest was $165,900, up 4.0 percent from a year ago.</p

Existing-home sales in the South increased 5.7 percent to an annual level ofrn2.05 million in May, but are down 0.5 percent from May 2013. The median pricernin the South was $184,800, up 4.4 percent from a year ago.</p

Existing-home sales in the West rose 0.9 percent to an annual rate of 1.09rnmillion in May, and are 11.4 percent below a year ago. The median price in thernWest was $297,500, which is 8.4 percent above May 2013.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.