Existing-home sales for the month of May will be at an annualized rate of about 5.18 million – up 2.9% from April and up 5.8% from a year ago – Auction.com's Real Estate Nowcast report forecasts.
The firm estimates that existing-home sales for the 12 months ended in May would fall in the range of 5.03 million and 5.34 million.
‘Heading into the summer buying season, we're expecting to see healthy increases in home sales activity – though those increases will likely occur at a more modest pace,’ says Rick Sharga, executive vice president of Auction.com, in a release. ‘While the jump we saw in March somewhat made up for lackluster performance in January and February, tight inventories, strict lending standards and diminished participation by investors remain significant obstacles for the market.’
Sharga also noted that the volatility seen over the past six months is a reminder for economists, investors and real estate professionals to keep monthly performance data in perspective.
‘It's important to keep blips like the one we saw in March in context,’ he says. ‘We're in an unusually volatile period in the housing market, with almost unprecedented swings in sales volumes from month to month. The bottom line is that in a truly healthy housing market, we'd already be on pace for 6 million existing-home sales, but at this rate, I expect that the market will stay in the 5 million range for at least the remainder of the year.’
Earlier this week, the National Association of Realtors reported that existing-home sales for April were at an annual rate of 5.04 million units – a 3.3% decrease compared to March.
Auction.com forecasts that the average price for an existing home will rise to $220,799 in May – up 4.2% compared to May 2014.
‘In our estimation, this burgeoning home price strength should help to boost sales out of their range, as a key constraint to sales at this time is the low level of inventory for sale,’ says Peter Muoio, chief economist for Auction.com. ‘Higher prices should entice more sellers into the market.’
But, stronger owner-occupier demand is also needed to offset current subdued investor purchasing activity. Muoio says, ‘Household formations have been following a much better path recently,’ which should ultimately lead to increased home sales.