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Sales of Existing Homes Fall in May, Low Investory Good for Housing Market
|The National Association of Realtors reports total existing-home sales fell 1.5 percent to a seasonally adjusted annual rate of 4.55 million in the month of May from 4.62 million in April.
Friday July 13th, 2012
A new report shows existing-home sales were down in May but remain significantly higher than this time last year while home prices are also recovering.
The National Association of Realtors reports total existing-home sales fell 1.5 percent to a seasonally adjusted annual rate of 4.55 million in the month of May from 4.62 million in April. While they declined on a monthly basis, sales are 9.6 percent above the 4.15 million-unit pace in May of last year. NAR credits the decrease to a lower inventory of homes in lower price ranges, including homes in Florida. "The slight pullback in monthly home sales is more likely due to supply constraints rather than softening demand," said Lawrence Yun, chief economist of NAR. "The normal seasonal upturn in inventory did not occur this spring."
According to the report, total housing inventory at the end of May dropped 0.4 percent to 2.49 million existing homes available for sale, representing a 6.6-month supply at the current sales pace. In April, there was a 6.5-month supply. The number of homes listed for sale is 20.4 percent below last year when there was a 9.1-month supply and unsold inventory has fallen from a record 4.04 million in July 2007. Despite a lower inventory, home sales had previously followed an upward trend for 11 months straight.
First-time buyers made up 34 percent of purchases in May, slightly lower than the 35 percent in April and 36 percent in May of last year. Low home prices and mortgage rates continue to provide high affordability for potential buyers, prompting many first-time buyers to become homeowners. While some consumers may be patiently waiting for prices and rates to fall, they have been at or near record lows and are expected to increase before the end of the year.
"The recovery is occurring despite excessively tight credit conditions and higher down payment requirements, which are negating the impact of record high affordability conditions." Yun said.
The national median existing-home price for all housing types was $182,600 in May, up 7.9 percent when compared to May 2011. This also marks the third consecutive month of year-over-year price gains. While higher prices may seem negative to buyers, they are an indicator of an improving housing industry throughout the country.
In the South, existing-home sales fell 0.6 percent to an annual level of 1.78 million in May, but are 9.2 percent higher than a year ago, according to NAR. The median price of homes for sale in the region was $159,700, up 7.8 percent from this time last year.