Emerging Buyer’s Market Lifts Home Sales in May
June 21, 2019
For the first time in two months, existing-home sales rose in May as consumers rushed to take advantage of lower mortgage rates and greater inventory. Total existing-home sales—completed transactions including single-family homes, townhomes, condos, and co-ops—jumped 2.5% month over month in May, reaching a seasonally adjusted annual rate of 5.34 million, the National Association of REALTORS® reported Friday. All four major regions of the U.S. saw an increase in sales last month, led by the Northeast.
“The purchasing power to buy a home has been bolstered by falling mortgage rates, and buyers are responding,” says NAR Chief Economist Lawrence Yun. However, total sales are still down 1.1% compared to a year ago.
Homes are selling at a brisk pace—an average of 26 days in May—and Yun continues to call for more new-home construction to meet growing demand. “More new homes need to be built,” Yun says. “Otherwise, we risk worsening the housing shortage, and an increasing number of middle-class families will be unable to achieve homeownership.”
Here’s a closer look at some of the top housing indicators from NAR’s latest report:
- Home prices: The median existing-home price for all housing types in May was $277,700, up 4.8% from a year ago. This marks the 87th consecutive month for annual increases.
- Inventories: Total housing inventory at the end of May rose to 1.92 million, up 2.7% from a year ago. Unsold inventory is at a 4.3-month supply at the current sales pace. While inventory was higher in May, it still remains near historic lows, Yun says. “Solid demand along with inadequate inventory of affordable homes have pushed the median home price to a new record high,” he says.
- Days on the market: Fifty-three percent of homes sold in May were on the market for less than a month. Properties remained on the market an average of 26 days in May, matching averages from a year ago.
- All-cash sales: All-cash transactions comprised 19% of sales in May, down from 21% a year ago. Individual investors tend to make up the largest bulk of all-cash sales. They purchased 13% of homes in May, down slightly from 14% a year ago.
- Distressed sales: The number of foreclosures and short sales continues to shrink. They represented just 2% of sales in May, down from 3% a year ago. Less than 1% of existing-home sales in May were short sales.
Here’s a closer look at how existing-home sales fared across the country in May:
- Northeast: Existing-home sales rose 4.7% to an annual rate of 670,000, nearly matching its pace from a year ago. Median price: $304,100, up 6.6% from May 2018.
- Midwest: Existing-home sales increased 3.4% to an annual rate of 1.22 million, 3.9% below a year ago. Median price: $220,500, an increase of 5.6% from a year ago.
- South: Existing-home sales increased 1.8% to an annual rate of 2.32 million in May, up 1.3% from a year ago. Median price: $241,400, up 3.6% from a year ago.
- West: Existing-home sales rose 1.8% last month to an annual rate of 1.13 million, 3.4% below a year ago. Median Price: $409,100, up 4.1% from a year ago.
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Updated: September 16, 2019