They're back! First-time Buyers Help Drive Existing Sales to Six Year High

Maybe this time it is for real – the recoveryrnof the housing market that is.  Coming onrntop of excellent residential construction news last week the NationalrnAssociation of Realtors® (NAR) said today that sales of existing homes in Mayrnwere at the highest rate in nearly six years and April sales, originallyrnreported down by more than 3 percent, weren’t hit as hard as first thought. If not for the Homebuyer Tax Credit in 2009, today’s numbers would be the highest in more than 8 years.</p

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Sales of single-family homes,rncondominiums, townhouses, and coops pushed 5.1 percent above April’s pace to a seasonallyrnadjusted annual rate of 5.35 million units. rnIn addition, the April rate was revised from 5.04 million to 5.09rnmillion units.  The surge put the Mayrnsales 9.2 percent higher than in May 2014 when the rate was 4.90 million andrnmade the month the 8^th consecutive one in which sales were higher onrna year-over-year basis.  </p

Perhaps as important as the sales numbersrnwas the increase in first-time homebuyers, from 30 percent to 32 percent of thernmarket.  This was the highest share forrnthese buyers since September 2012 and was 5 percentage points higher than inrnMay 2014.rn</p

Single-family home sales jumped 5.6rnpercent to a seasonally adjusted annual rate of 4.73 million in May from 4.48rnmillion in April, and are and now 9.7 percent above the 4.31 million pace arnyear ago.  Existing condominium and co-oprnsales increased 1.6 percent to a rate of 620,000 units from 610,000 units inrnApril, 5.1 percent above the rate of 590,000 units in May 2014. </p

Lawrence Yun, NAR chief economist, saysrnMay home sales rebounded strongly following April’s decline and are now atrntheir highest pace since the 5.44 million rate in November 2009.  “Solid sales gains were seen throughoutrnthe country in May as more homeowners listed their home for sale and thereforernprovided greater choices for buyers,” he said. “However, overallrnsupply still remains tight, homes are selling fast and price growth in manyrnmarkets continues to teeter at or near double-digit appreciation. Without solidrngains in new home construction, prices will likely stay elevated – even withrnhigher mortgage rates above 4 percent.</p

“The return of first-time buyersrnin May is an encouraging sign and is the result of multiple factors, includingrnstrong job gains among young adults, less expensive mortgage insurance andrnlenders offering low downpayment programs,” Yun said. “Morernfirst-time buyers are expected to enter the market in coming months, but thernoverall share climbing higher will depend on how fast rates and pricesrnrise.”</p

The median existing-home price forrnhomes sold in May was $228,700, a 7.9 percent increase from one year earlierrnand the 39th consecutive month of annual price gains.  The median existing single-family home pricernwas $230,300 up 8.6 percent year-over-year and the median existing condo price ofrn$216,400 marked a 1.9 percent annual increase.  </p

The inventory of existing homes forrnsale at the end of May grew by 3.2 percent from the end of April to 2.29rnmillion homes.  This was 1.8 percent morernthan the 2.25 million available homes in May 2014.  Unsold inventory is at a 5.1-month supply atrnthe current sales pace, down from 5.2 months in April.</p

NAR President Chris Polychro, saysrnRealtors® overwhelmingly support the Consumer Financial Protection Bureau’srnproposal of a two-month delay for the implementation of the new Truth inrnLending Act and Real Estate Settlement Procedures Act Integrated Disclosure, orrnTRID, regulation. “NAR has long advocated the need to avoid implementingrnthe new regulation during the peak buying season,” he said. “Withrninterest rates on the rise, many families wanting to buy are looking to lock-inrnat current rates and move into their new home before the school year starts.rnHolding off on TRID implementation through the summer helps these buyers avoidrnany disruption or delays in closings that could develop once the regulationrngoes into effect.”</p

All-cash sales were 24 percent ofrntransactions in May for the third straight month and are down considerably fromrna year ago (32 percent). Individual investors, who account for many cash sales,rnpurchased 14 percent of homes in May, unchanged from last month and down fromrn16 percent in May 2014. Sixty-seven percent of investors paid cash in May.</p

Foreclosures made up 7 percent of salesrnand short sales another 3 percent.  Itrnwas the third consecutive month that distressed shares had a combined 10rnpercent share.  Foreclosures sold for anrnaverage discount of 15 percent below market value in May (20 percent in April),rnwhile short sales were also discounted 16 percent (14 percent in April).</p

Tight inventories kept marketing timerndown with the typical property taking 40 days to sell in May compared to 39rndays in April; the third shortest time since NAR began tracking in May 2011.rnShort sales were on the market the longest at a median of 131 days in May,rnwhile foreclosures sold in 56 days and non-distressed homes took 38 days.rnForty-five percent of homes sold in May were on the market for less than arnmonth.</p

Every region saw increased sales in Mayrncompared to April led by the Northeast where existing-home sales jumped 11.3rnpercent to an annual rate of 690,000, and are now 11.3 percent above a yearrnago. The median price in the Northeast was $269,000, which is 4.8 percentrnhigher than May 2014.</p

Sales in the Midwest rose 4.1 percentrnto an annual rate of 1.27 million in May, 12.4 percent higher than a yearrnearlier. The median price in the Midwest was $181,900, up 9.4 percent from arnyear ago.</p

In the South there was a 4.3 percentrngain to an annual rate of 2.18 million, 6.9 percent above May 2014. The medianrnprice in the South was $198,300, up 8.2 percent from a year ago.</p

Existing-home sales in the West climbedrn4.3 percent month-over-month and 9.0 percent year-over-year to an annual raternof 1.21 million in May. The median price in the West was $324,000, which isrn10.2 percent above May 2014.

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