Steel Markets

Existing Home Sales in May Best Since 2007

June 23, 2016

Existing home sales in May grew to their highest pace in over nine years, said the National Association of Realtors in their most recent report. Sales were up 1.8 percent to a seasonally adjusted annual rate of 5.53 million, compared to the downwardly revised April rate of 5.43 million.

Existing sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose for the third consecutive month in May. “This spring’s sustained period of ultra-low mortgage rates has certainly been a worthy incentive to buy a home, but the primary driver in the increase in sales is more homeowners realizing the equity they’ve accumulated in recent years and finally deciding to trade-up or downsize,” said Lawrence Yun, NAR chief economist. “With first-time buyers still struggling to enter the market, repeat buyers using the proceeds from the sale of their previous home as their down payment are making up the bulk of home purchases right now.”

Added Yun, “Barring further deceleration in job growth that could ultimately temper demand from these repeat buyers, sales have the potential to mostly maintain their current pace through the summer.”

The median sales price for all types of houses in May was $239,700, up 4.7 percent from May 2015 and the 51st consecutive month of year over year gains.

Single family home sales grew 1.9 percent from April to a rate of 4.90 million. The median price of $241,000 was an increase of 4.6 percent from May 2015.

Condos and Co-op sales grew 1.6 percent from April and condos sold for a median price of $229,600, a 6.0 percent increase year over year.

Tight inventory is still an issue for the housing industry. Total housing inventory at the end of May was 2.15 million existing homes for sale, up 1.4 percent from April but still 5.7 percent lower than the same period a year ago. At the current sales pace, unsold inventory is at a 4.7 month supply, the same as April.

“Existing inventory remains subdued throughout much of the country and continues to lag even last year’s deficient amount,” adds Yun. “While new home construction has thankfully crept higher so far this year, there’s still a glaring need for even more, to help alleviate the supply pressures that are severely limiting choices and pushing prices out of reach for plenty of prospective first-time buyers.”

Regionally, sales were strong everywhere but in the Midwest where sales dropped 6.5 percent from April to an annual rate of 1.30 million. Midwest prices were up 4.8 percent from a year ago.

Sales in the South grew 4.6 percent from April, the West 5.4 percent and the Northeast 11.6 percent. Median prices in the South were up 5.9 percent to $211,500 and in the West up 7.7 percent to $346,900. Prices in the Northeast were little changed, dropping 0.1 percent to $268,600.