May Existing Home Sales Fall Back

Existing home sales fell for the second straight months, the National Association of Realtors reported yesterday, with only the Northeast reporting an uptick in activity.

NAR reported total existing-home sales fell by 0.4 percent to a seasonally adjusted annual rate of 5.43 million in May from downwardly revised 5.45 million in April. With last month’s decline, sales are now 3.0 percent below a year ago and have fallen year-over-year for three straight months.

The report said single-family home sales declined by 0.6 percent to 4.81 million in May from 4.84 million in April, and are 3.0 percent below the 4.96 million sales pace a year ago. The median existing single-family home price rose to $267,500 in May, up 5.2 percent from a year ago. Existing condominium and co-op sales increased by 1.6 percent to 620,000 units in May, but fell by 3.1 percent from a year ago. The median existing condo price rose $244,100 in May, 2.5 percent above a year ago.

Regionally, sales in the Northeast increased by 4.6 percent to an annual rate of 680,000, but are 11.7 percent below a year ago. The median price in the Northeast fell to $275,900, which is down 1.8 percent from a year ago.

All other regions saw monthly declines: in the Midwest, sales fell by 2.3 percent to 1.26 million in May and by 2.3 percent below a year ago. The median price in the Midwest rose to $209,900, up 4.2 percent from a year ago. Sales in the South dropped by 0.4 percent to 2.32 million in May and were unchanged from a year ago. The median price in the South rose to $233,100, up 4.5 percent from a year ago. Sales in the West decreased by 0.8 percent to 1.17 million in May and by 4.1 percent from a year ago. The median price in the West jumped to $395,800, up 7.2 percent from a year ago.

“Inventory shortages are still clearly restraining existing home sales,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “While existing home sales have fallen 3 percent over the past year, the number of homes for sale has fallen 6.1 percent.”

Lawrence Yun, NAR chief economist, conceded a solid economy and job market should be generating a much stronger sales pace than what has been seen so far this year. “Closings were down in a majority of the country last month and declined on an annual basis in each major region,” he said. “Incredibly low supply continues to be the primary impediment to more sales, but there’s no question the combination of higher prices and mortgage rates are pinching the budgets of prospective buyers, and ultimately keeping some from reaching the market.”

NAR reported the median existing-home price for all housing types in May rose to a record-high $264,800, up 4.9 percent from a year ago ($252,500). May’s price increase marks the 75th straight month of year-over-year gains.

Total housing inventory at the end of May improved by 2.8 percent to 1.85 million existing homes available for sale, but is still 6.1 percent lower than a year ago (1.97 million) and has fallen year-over-year for 36 consecutive months. Unsold inventory is at a 4.1-month supply at the current sales pace (4.2 months a year ago).

The report said properties typically stayed on the market for 26 days in May, unchanged from April and down from 27 days a year ago. Fifty-eight percent of homes sold in May were on the market for less than a month. “Inventory coming onto the market during this year’s spring buying season–as evidenced again by last month’s weak reading–was not even close to being enough to satisfy demand,” Yun said. “That is why home prices keep outpacing incomes and listings are going under contract in less than a month–and much faster–in many parts of the country.”

The report said first-time buyers represented 31 percent of sales in May, down from 33 percent both last month and a year ago. All-cash sales represented 21 percent of transactions in May, unchanged from April and down from 22 percent a year ago. Individual investors purchased 15 percent of homes in May, unchanged from last month and down from 16 percent a year ago.

NAR said distressed sales represented 3 percent of sales in May, the lowest since NAR began tracking in October 2008, down from 4 percent last month and 5 percent a year ago. Two percent of May sales were foreclosures; 1 percent were short sales.