Existing home sales fell back in the United States for the second month in a row in May, down by 0.4% and are now 3% below where they were at the same time in 2017, the latest index shows.
The marketing is puzzling for real estate agents and Lawrence Yun, chief economist of the National Association of Realtors (NAR), said that the solid economy and job market should be generating a much stronger sales pace than has been seen so far this year.
The NAR index shows that closings were down in a majority of the country last month and declined on an annual basis in each major region. ‘Incredibly low supply continues to be the primary impediment to more sales, but there’s no question the combination of higher prices and mortgage rates are pinching the budgets of prospective buyers, and ultimately keeping some from reaching the market,’ said Yun.
At the same time, prices are at an all-time high, with the index showing that the median existing home price for all housing types in May was $264,800, up 4.9% from May 2017. It was the 75th month in a row of annual price growth.
Total housing inventory was up 2.8% at the end of May but is still 6.1% lower than a year ago and has fallen year on year for 36 consecutive months. The data also shows that properties typically stayed on the market for 26 days in May, unchanged from April and down from 27 days a year ago. Some 58% of homes sold in May were on the market for less than a month.
‘Inventory coming onto the market during this year’s spring buying season, as evidenced again by last month’s weak reading, was not even close to being enough to satisfy demand. That is why home prices keep outpacing incomes and listings are going under contract in less than a month, and much faster, in many parts of the country,’ Yun explained.
He also pointed out that an abrupt hike in mortgage rates along with price appreciation and competition being the strongest in the entry level part of the market means that first time buyers are not as active as they should be and their participation remains below its historical average.
Indeed, the figures reveal that first time buyers accounted for 31% of sales in May, down from 33% in the previous month and a year ago when it was 34%.
A breakdown of the figures show that sales in the Northeast increased 4.6% in May but are 11.7% down year on year while the median price of $275,900 is down 1.8% from May 2017.
In the Midwest, existing home sales declined 2.3% and are now 2.3% below a year ago with a median price of $209,900, up 4.2% from a year ago.
Existing-home sales in the South inched backward 0.4% and are unchanged from a year ago with a median price of $233,100, up 4.55 from a year ago.
