NAR Provides Snapshot Of Healthy Market In May

Posted by Michael Bates on June 21, 2017 No Comments

Existing-home sales rebounded in May following a notable decline in April, and low inventory levels helped propel the median sales price to a new high while pushing down the median days a home is on the market to a new low, according to the National Association of Realtors (NAR).

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, climbed 1.1% to a seasonally adjusted annual rate of 5.62 million in May from a downwardly revised 5.56 million in April. Last month’s sales pace is 2.7% above a year ago and is the third highest over the past year.

Lawrence Yun, NAR chief economist, says 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,” he says. “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.”

The median existing-home price for all housing types in May was $252,800. This surpasses last June ($247,600) as the new peak median sales price, is up 5.8% from May 2016 ($238,900) and marks the 63rd straight month of year-over-year gains.

Total housing inventory at the end of May rose 2.1%, to 1.96 million existing homes available for sale, but is still 8.4% 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, which is down from 4.7 months a year ago.

“Home prices keep chugging along at a pace that is not sustainable in the long run,” adds 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.”

Properties typically stayed on the market for 27 days in May, which is down from 29 days in April and 32 days a year ago; this is the shortest time frame 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).

Inventory data from realtor.com reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in May were Seattle-Tacoma-Bellevue, Wash., 20 days; San Francisco-Oakland-Hayward, Calif., 24 days; San Jose-Sunnyvale-Santa Clara, Calif., 25 days; and Salt Lake City, Utah and Ogden-Clearfield, Utah, both at 26 days.

“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,” Yun says.

First-time buyers were 33% of sales in May, which is down from 34% in April but up from 30% a year ago. All-cash sales were 22% of transactions in May, up from 21% in April and unchanged from a year ago. Individual investors, who account for many cash sales, purchased 16% of homes in May, up from 15% in April and 13% a year ago. Sixty-four percent of investors paid in cash in May.

Regionally, existing-home sales in the Northeast jumped 6.8% to an annual rate of 780,000 and are now 2.6% above a year ago. The median price in the Northeast was $281,300, which is 4.7% above May 2016.

In the Midwest, existing-home sales fell 5.9% to an annual rate of 1.28 million in May and are 0.8% below a year ago. The median price in the Midwest was $203,900, up 7.3% from a year ago.

Existing-home sales in the South rose 2.2% to an annual rate of 2.34 million and are now 4.5% above May 2016. The median price in the South was $221,900, up 5.3% from a year ago.

Existing-home sales in the West increased 3.45 to an annual rate of 1.22 million in May and are now 3.4% above a year ago. The median price in the West was $368,800, up 6.9% from May 2016.

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