May Existing Home Sales Up; Median Sales Price at New High

Following an unusual April decline, existing home sales rebounded somewhat in May, while continued low housing inventories pushed home prices to record highs, the National Association of Realtors said yesterday.

NAR said total existing home sales rose by 1.1 percent to a seasonally adjusted annual rate of 5.62 million in May from a downwardly revised 5.56 million in April. The sales pace came in 2.7 percent higher than a year ago.

Single-family home sales increased by 1.0 percent to 4.98 million in May from 4.93 million in April and by 2.7 percent from a year ago (4.85 million). The median sales price rose to $254,600 in May, up 6.0 percent from a year ago. Existing condominium and co-op sales rose by 1.6 percent to 640,000 units in May and by 3.2 percent from a year ago. The median existing condo price rose to $238,700 in May, nearly 5 percent higher than year ago.

Regionally, sales in the Northeast jumped by 6.8 percent to an annual rate of 780,000, and rose by 2.6 percent above a year ago. The median price rose to $281,300, 4.7 percent higher than a year ago. Sales in the South rose by 2.2 percent to 2.34 million and improved by 4.5 percent from a year ago. The median price in the South rose to $221,900, up 5.3 percent from a year ago.

Sales in the West increased by 3.4 percent to 1.22 million units in May and improved by 3.4 percent from a year ago. The median price in the West rose to $368,800, up 6.9 percent from a year ago. Only the Midwest saw a decline, with sales off by 5.9 percent to 1.28 million in May and 0.8 percent below a year ago. The median price in the Midwest rose to $203,900, up 7.3 percent from a year ago.

“Sales in both [April and May] were restrained by lean inventories, which are likely deterring some potential buyers,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “Seasonal factors have also played a role, with mild weather pulling sales to the early part of the year.”

NAR Chief Economist Lawrence Yun said sales activity expanded in May as more buyers overcame the increasingly challenging market conditions prevalent in many areas.

“The job market in most of the country is healthy and the recent downward trend in mortgage rates continues to keep buyer interest at a robust level,” Yun said. “Those able to close on a home last month are probably feeling both happy and relieved. Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace and the prevalence of multiple offers in some markets are pushing prices higher.”

NAR said the median existing-home price for all housing types in May jumped to $252,800. This surpasses last June ($247,600) as the new peak median sales price and rose by 5.8 percent from a year ago ($238,900), marking the 63rd straight month of year-over-year gains.

Total housing inventory at the end of May rose by 2.1 percent to 1.96 million existing homes available for sale, but was 8.4 percent lower than a year ago (2.14 million) and has fallen year-over-year for 24 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, down from 4.7 months a year ago.

“Home prices keep chugging along at a pace that is not sustainable in the long run,” added Yun. “Current demand levels indicate sales should be stronger, but it’s clear some would-be buyers are having to delay or postpone their home search because low supply is leading to worsening affordability conditions.”

The report said properties typically stayed on the market for 27 days in May, down from 29 days in April and 32 days a year ago; this is the shortest timeframe since NAR began tracking in May 2011. Short sales were on the market the longest at a median of 94 days in May, while foreclosures sold in 48 days and non-distressed homes took 27 days. Fifty-five percent of homes sold in May were on the market for less than a month (a new high).

“With new and existing supply failing to catch up with demand, several markets this summer will continue to see homes going under contract at this remarkably fast pace of under a month,” said Yun.

NAR said first-time buyers represented 33 percent of sales in May, down from 34 percent in April but up from 30 percent a year ago. All-cash sales represented 22 percent of transactions in May, up from 21 percent in April and unchanged from a year ago. Individual investors purchased 16 percent of homes in May, up from 15 percent in April and 13 percent a year ago. Sixty-four percent of investors paid in cash in May.

The report said distressed sales represented 5 percent of sales in May, unchanged from April and down from 6 percent a year ago. Four percent of May sales were foreclosures; 1 percent were short sales. Foreclosures sold for an average discount of 20 percent below market value in May (18 percent in April), while short sales were discounted 16 percent (12 percent in April).