Analysts predict May will close on a down note for U.S. residential home sales and prices, but the National Association of Realtors believes it is a temporary situation that will improve in the second half of the year. The current dip is blamed on high gasoline prices, restrictive lending, natural disasters and a glut of distressed homes on the market that are dragging down average prices. Buyers are expected to start taking advantage of sales bargains that are evident in almost every area of the housing market as sellers try to attract interest in the market. For more on this continue reading the following article from PropertyWire.
The residential property in the United States is all over the place with the latest figures from the National Association of Realtors showing that existing home sales were down in May.
Existing home sales, that is completed transactions that include single family, townhomes, condominiums and co-ops, fell 3.8% to a seasonally adjusted annual rate of 4.81 million in May from a downwardly revised 5.00 million in April.
Sales are now 15.3% below a 5.68 million pace in May 2010 when sales were surging to beat the deadline for the home buyer tax credit. The NAR blames temporary factors and financing problems for the dip in May sales and predicts an improving picture for the rest of the year.
‘Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May, said NAR chief economist Lawrence Yun.
‘Current housing market activity indicates a very slow pace of broader economic activity, but recent reversals in oil prices are likely to mitigate the impact going forward. The pace of sales activity in the second half of the year is expected to be stronger than the first half, and will be much stronger than the second half of last year,’ he added.
Yun said the market also is being constrained by the lending community. ‘Even with recent economic softness, this is a disappointing performance with home sales being held back by overly restrictive loan underwriting standards. There’s been a pendulum swing from very loose standards which led to the housing boom to unnecessarily restrictive practices as an overreaction to the housing correction, this overreaction is clearly holding back the recovery,’ explained Yun.
There were notable regional differences in home sales. ‘A large decline in Midwestern existing home sales can be attributed partly to the flooding and other severe weather patterns that occurred, but this also implies a temporary nature of soft market activity,’ Yun explained.
The national median existing home price for all housing types was $166,500 in May, down 4.6% from May 2010. Distressed homes, typically sold at a discount of about 20%, accounted for 31% of sales in May, down from 37% in April and the same as in May 2010.
‘The price decline could be diminishing, as buyers recognize great bargain prices and the highest affordability conditions in 40 years. This will help mitigate further price drops. Home prices are rising or very stable in local markets with improved employment conditions, such as in North Dakota, Alaska, Washington, D.C., and many parts of Texas,’ Yun noted.
However, NAR President Ron Phipps, warned that a number of proposals being considered in Washington could further jeopardize the housing recovery. ‘We’re concerned about the flow of available capital, including a possible rule that would effectively raise minimum down payment requirements to 20%. Increasing down payment requirements would effectively shut many qualified families out of the market. What we critically need is a return to the basics of providing safe mortgages to creditworthy buyers willing to stay well within their budget,’ he explained.
The figures also show that total housing inventory at the end of May fell 1% to 3.72 million existing homes available for sale, which represents a 9.3 month supply at the current sales pace.
The number of first time buyers remains steady at 35% of homes in May, down from 36% in April but well b below the 46% of May 2010 when the tax credit was in place. The number of investors have increased, some 19% in compared with 14% a year ago.
Regionally, existing home sales in the North east fell by 2.5% and are 13.5% below May 2010. But median prices reached $241,500, up 6.1% from a year ago.
Existing home sales in the Midwest fell 6.4% in May and are now 22.7% below a year ago. Prices have not recovered in this region. The median price was $136,400, some 8.5% below May 2010.
In the South, existing home sales fell 5.1% and are 14.4% below May 2010. The median price was $149,200, down 3.1% from a year ago.
Existing home sales in the West were unchanged but are 10% lower than a year ago. The median price in the West was $192,300, which is 12.6% below May 2010.
This article was republished with permission from PropertyWire.