Recovery in US housing market looking solid, according to latest NAR data

Existing home sales in the United States improved in May and remain solidly above a year ago, while the median price continued to rise by double digit rates from a year earlier, according to the latest data from the National Association of Realtors.

Total existing home sales, which are completed transactions that include single family homes, town homes, condominiums and co-ops, rose 4.2% to a seasonally adjusted annual rate of 5.18 million in May from 4.97 million in April, and is 12.9 percent above the 4.59 million-unit pace in May 2012.

Lawrence Yun, NAR chief economist, said the recovery is strengthening and he expects limited housing supplies for the rest of the year in much of the country. ‘The housing numbers are overwhelmingly positive. However, the number of available homes is unlikely to grow, despite a nice gain in May, unless new home construction ramps up quickly by an additional 50%,’ he explained.

‘The home price growth is too fast, and only additional supply from new home building can moderate future price growth,’ he added.

Existing home sales are at their highest level since November 2009 when the market jumped to 5.44 million as buyers took advantage of tax stimulus. Sales have stayed above year ago levels for 23 months, while the national median price shows 15 consecutive months of year on year increases.

Total housing inventory at the end of May rose 3.3% to 2.22 million existing homes available for sale, which represents a 5.1 month supply at the current sales pace, down from 5.2 months in April.  Listed inventory is 10.1 percent below a year ago, when there was a 6.5 month supply.

The national median existing home price for all housing types was $208,000 in May, up 15.4% from May 2012. This marks six straight months of double digit increases and is the strongest price gain since October 2005, which jumped a record 16.6% from a year earlier. NAR pointed out that the last time there were 15 consecutive months of yea on year price increases was from March 2005 to May 2006.

Distressed homes, that includes foreclosures and short sales, accounted for 18% of May sales, unchanged from April, but matching the lowest share since monthly tracking began in October 2008 and compares with 25% in May 2012. Fewer distressed homes, which generally sell at a discount, account for some of the price gain.

Overall some 11% of May sales were foreclosures, and 7% were short sales. Foreclosures sold for an average discount of 15% below market value in May, while short sales were discounted 12%.

NAR president Gary Thomas said that market conditions today are vastly different than during the housing boom. ‘The boom period was marked by easy credit and overbuilding, but today we have tight mortgage credit and widespread shortages of homes for sale,’ he explained.

‘The issue now is pent up demand and strong growth in the number of households, with buyer traffic 29 percent above a year ago, coinciding with several years of inadequate housing construction. These conditions are contributing to sustainable price growth,’ he added.

The median time on market for all homes was 41 days in May, down from 46 days in April, and is 43% faster than the 72 days on market in May 2012. Short sales were on the market for a median of 79 days, while foreclosures typically sold in 43 days and non distressed homes took 39 days.

Some 45% of all homes sold in May were on the market for less than a month. The median time on the market is the shortest since monthly tracking began in May 2011. On an annual basis, a separate NAR survey of home buyers and sellers shows the shortest selling time was four weeks in both 2004 and 2005.

First time buyers accounted for 28% of purchases in May, compared with 29% in April and 34% in May 2012. All cash sales were at 33% of transactions in May, up from 32% in April and 28% in May 2012. Individual investors, who account for many cash sales, purchased 18% of homes in May compared with 19% in April and 17% in May 2012.

Single family home sales rose 5% to a seasonally adjusted annual rate of 4.60 million in May from 4.38 million in April, and are 12.7% higher than the 4.08 million unit pace in May 2012.  The median existing single family home price was $208,700 in May, up 15.8% above a year ago, the strongest increase since October 2005 when it jumped 16.9% from a year earlier.

Existing condominium and co-op sales slipped 1.7% to an annualised rate of 580,000 units in May from 590,000 in April, but are 13.7% above the 510,000 unit level a year ago. The median existing condo price was $202,100 in May, which is 11.8% above May 2012.
Regionally, existing home sales in the Northeast rose 1.6% to an annual rate of 650,000 in May and are 8.3% above May 2012. The median price in the Northeast was $269,600, up 12.3% from a year ago.

Existing home sales in the Midwest jumped 8% in May to a pace of 1.21 million and are 16.3% higher than a year ago. The median price in the Midwest was $159,800, up 8.2% from May 2012.

In the South, existing home sales rose 4% to an annual level of 2.09 million in May and are 16.1% above May 2012.  The median price in the South was $183,300, which is 15% above a year ago.

Existing home sales in the West increased 2.5% to a pace of 1.23 million in May and are 7% above a year ago. With the tightest regional supply, the median price in the West was $276,400, up 19.9% from May 2012.