Existing home sales in the US increased strongly in May and inventory gains continued to help moderate price growth, according to the latest monthly report from the National Association of Realtors.
All four regions of the country experienced sales gains compared to a month earlier and the median existing home price for all housing types was $213,400, some 5.1% higher than May 2013.
Total existing home sales, which are completed transactions that include single family homes, town homes, condominiums and co-ops, rose 4.9% to a seasonally adjusted annual rate of 4.89 million in May from an upwardly revised 4.66 million in April, but remain 5% below May 2013.
However, the 4.9% increase was the highest monthly rise since August 2011 when it was 5.5% and Lawrence Yun, NAR chief economist, said current sales activity is rebounding after a 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. Moreover, sales were helped by the improving job market and the temporary but slight decline in mortgage rates,’ he explained.
Total housing inventory at the end of May climbed 2.2% to 2.28 million existing homes available for sale, which represents a 5.6 month supply at the current sales pace, down slightly from 5.7 months in April. Unsold inventory is 6% higher than a year ago, when there were 2.15 million existing homes available for sale.
‘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 added.
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The data also shows that foreclosures and short sales accounted for 11% of May sales, down from 18% in May 2013. Overall 8% of May sales were foreclosures and 3% were short sales. Foreclosures sold for an average discount of 18% below market value in May, while short sales were discounted 11%.
The percent share of first time buyers continued to underperform, representing less than a third of all buyers at 27% in May, down from 29% in April and 29% in April 2013.
NAR president Steve Brown said that housing fundamentals are showing slight improvement in markets across the country. ‘Many potential buyers were left on the side lines beginning last summer as affordability declined amidst rising home prices and interest rates,’ he pointed out.
‘The temporary pause in rising interest rates and more homes for sale is good news, especially for first time buyers who likely have a better chance in upcoming months to make a competitive offer that’s in return accepted by the seller,’ he added.
The median time on market for all homes was 47 days in May, down from 48 days in April but above the 41 days on market recorded in May 2013. Short sales were on the market for a median of 125 days in May, while foreclosures typically sold in 57 days and non-distressed homes took 44 days. Some 41% of homes sold in May were on the market for less than a month.
All cash sales comprised 32% of transactions in May, unchanged from last month and down from 33% in May 2013. Individual investors, who account for many cash sales, purchased 16% of homes in May, down from 18% in April and 18% in May 2013 while 68% of investors paid cash in May.
Single family home sales rose 5.7% to a seasonally adjusted annual rate of 4.3 million in May from 4.07 million in April, but remain 5.7% below the 4.56 million pace from a year ago. The median existing single family home price was $213,600 in May, up 4.9% from May 2013.
Existing condominium and co-op sales remained unchanged in May from April as well as May 2013 at an annual rate of 590,000 units. The median existing condo price was $212,300 in May, which is 6.6% higher than a year ago.
Regionally, existing home sales in the Northeast rose 3.3% but are 3.1% below a year ago while the median price was $256,700, down 0.9% from May 2013.
In the Midwest, existing home sales jumped 8.7% in May, but are still 7.4% below May 2013 and the median price was $165,900, up 4% from a year ago.
Existing home sales in the South increased 5.7% in May, but are down 0.5% from May 2013 while the median price in the South was $184,800, up 4.4% from a year ago.
Existing home sales in the West rose 0.9% in May, and are 11.4% below a year ago and the median price in the West was $297,500, which is 8.4% above May 2013.
This article was republished with permission from Property Wire.