Existing-Home Sales up 4.9%

June 23, 2014

Existing-home sales rose strongly in May, with all four regions of the country experiencing sales gains on the previous month, according to the National Association of REALTORS®. The association also noted that inventory gains continued to help moderate price growth.

Total existing-home sales (comprised of completed transactions on single-family homes, townhomes, condominiums and co-ops) rose 4.9 percent to a seasonally adjusted annual rate of 4.89 million in May from an upwardly-revised 4.66 million in April. This was the highest monthly rise since August 2011, but existing home sales remain 5 percent below year-ago levels.

Lawrence Yun, NAR chief economist, said current sales activity is rebounding after the lackluster first quarter. “Home buyers are benefiting from slower price growth due to the much-needed, rising inventory levels seen since the beginning of the year,” he said. “Moreover, sales were helped by the improving job market and the temporary but slight decline in mortgage rates.”

Inventory and average sales price also increased in May. Inventory climbed 2.2 percent, and the median existing-home price for all housing types in May was 5.1 percent higher than year-ago levels, at $213,400.

“Rising inventory bodes well for slower price growth and greater affordability, but the amount of homes for sale is still modestly below a balanced market. Therefore, new home construction is still needed to keep prices and housing supply healthy in the long run,” Yun said.

Earlier this month, NAR reported new home construction activity is currently insufficient in most of the U.S., and some states could face persistent housing shortages and affordability issues unless housing starts increase to match up with local job creation.

The share of first-time buyers continued to underperform, representing 27 percent of all buyers in May, down from 29 percent in April. However, NAR President Steve Brown, co-owner of Irongate, Inc., REALTORS® in Dayton, Ohio, said housing fundamentals are showing slight improvement in markets across the country.

“Many potential buyers were left on the sidelines beginning last summer as affordability declined amidst rising home prices and interest rates,” he said. “The temporary pause in rising interest rates and more homes for sale is good news – especially for first-time home buyers – who likely have a better chance in upcoming months to make a competitive offer that’s in return accepted by the seller.”

Other insights from the exiting-home sales report include:

  • Foreclosures and short sales accounted for 11 percent of May sales, down from 18 percent in May 2013.
  • The median time on market for all homes was 47 days in May, down from 48 days in April; it was 41 days on market in May 2013.
  • Forty-one percent of homes sold in May were on the market for less than a month.
  • All-cash sales comprised 32 percent of transactions in May, unchanged from last month and down from 33 percent in May 2013.
  • The median existing condo price was $212,300 in May, which is 6.6 percent higher than a year ago.

Regional data showed the following trends across the country:

  • Existing-home sales in the Northeast rose 3.3 percent to an annual rate of 620,000 in May, but are 3.1 percent below a year ago. The median price in the Northeast was $256,700, down 0.9 percent from May 2013.
  • In the Midwest, existing-home sales jumped 8.7 percent to an annual rate of 1.13 million in May, but are still 7.4 percent below May 2013. The median price in the Midwest was $165,900, up 4.0 percent from a year ago.
  • Existing-home sales in the South increased 5.7 percent to an annual level of 2.05 million in May, but are down 0.5 percent from May 2013. The median price in the South was $184,800, up 4.4 percent from a year ago.
  • Existing-home sales in the West rose 0.9 percent to an annual rate of 1.09 million in May, and are 11.4 percent below a year ago. The median price in the West was $297,500, which is 8.4 percent above May 2013.

Source: "Existing-Home Sales Heat Up in May, Inventory Levels Continue to Improve," NAR (June 23, 2014)