U.S. Existing-Home Sales Rise in May; NY Home Sales Set New Record

Real Estate In-Depth | June 2017

Suburban home with front porch and cedar roof

WASHINGTON— Existing U.S. home sales rebounded in May following a notable 2.3% 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 a report released on June 21 by the National Association of Realtors. All major regions with the exception of the Midwest saw an increase in sales.

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 was 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 said. “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 surpassed last June ($247,600) as the new peak median sales price, which was up 5.8% from May 2016 ($238,900) and marked 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 was still 8.4% lower than a year ago (2.14 million) and had fallen year-over-year for 24 consecutive months. Unsold inventory was at a 4.2-month supply at the current sales pace, which was down from 4.7 months a year ago.

“Home prices keep chugging along at a pace that is not sustainable in the long run,” added 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 was down from 29 days in April and 32 days a year ago; this was the shortest timeframe 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. A total of 55% of homes sold in May were on the market for less than a month (a new high).

Inventory data from realtor.com revealed that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in May were Seattle-Tacoma-Bellevue, WA, 20 days; San Francisco-Oakland-Hayward, CA, 24 days; San Jose-Sunnyvale-Santa Clara, CA, 25 days; and Salt Lake City, UT and Ogden-Clearfield, UT, 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,” said Yun.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased for the second consecutive month, dipped to 4.01% in May from 4.05% in April. The average commitment rate for all of 2016 was 3.65%.

First-time buyers accounted for 33% of sales in May, which was down from 34% in April but up from 30% a year ago. NAR’s 2016 Profile of Home Buyers and Sellers —released in late 2016—revealed that the annual share of first-time buyers was 35%.

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.

Distressed sales—foreclosures and short sales—were 5% of sales in May, unchanged from April and down from 6% a year ago. Four percent of May sales were foreclosures and 1% were short sales. Foreclosures sold for an average discount of 20% below market value in May (18% in April), while short sales were discounted 16% (12% in April).

Single-Family and Condo/Co-op Sales

Single-family home sales increased 1.0% to a seasonally adjusted annual rate of 4.98 million in May from 4.93 million in April, and were 2.7% above the 4.85 million pace a year ago. The median existing single-family home price was $254,600 in May, up 6.0% from May 2016.

Existing condominium and co-op sales climbed 1.6% to a seasonally adjusted annual rate of 640,000 units in May, and were 3.2% higher than a year ago. The median existing condo price was $238,700 in May, which was 4.8% above a year ago.

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

New York State May Home Sales Set New Record

The New York State Association of Realtors reported on June 21 that homebuyer demand remained strong in the Empire State during May as closed sales set a record for the month at 10,704, surpassing the record set last May by 4.6%. The statewide median sales price continued its upward climb, increasing by 7.1% compared to last May.

“Spring buyer activity remained strong as New Yorkers closed on a record number of homes in May,” said Duncan R. MacKenzie, CEO of the New York State Association of Realtors. “This is a welcome reversal after the slight dip in April sales as some buyers struggled to find their next home.”

The May 2017 statewide median sales price was $239,000, an increase of 7.1% from the May 2016 median of $223,200. May 2017 pending sales increased by 8.2% from a year ago to reach 14,710.

The months supply of homes for sale dropped 18.7% at the end of May to 6.1 months supply. It was at 7.5 months at the end of May 2016. A 6.0-month to 6.5-month supply is considered to be a balanced market. Inventory at the end of May 2017 stood at 68,819, a decrease of 16.4% compared to May 2016.