All major U.S. regions except the Midwest saw an uptick in existing-home sales last month, the National Association of REALTORS® reported Wednesday. As tight inventories continue to plague many markets, the median sales price for all housing types climbed to an all-time high of $239,700 in May — up 4.7 percent from a year earlier — as buyer demand outweighs housing supply.
Total existing-home sales, which are completed transactions for single-family homes, townhomes, condos, and co-ops, increased 1.8 percent month-over-month to a seasonally adjusted annual rate of 5.53 million in May. Sales are now up 4.5 percent from a year ago and are at the highest annual pace since February 2007. This is the third consecutive month for gains in existing-home sales.
“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 home owners realizing the equity they’ve accumulated in recent years and finally deciding to trade up or downsize,” says Lawrence Yun, NAR’s 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.”
Yun says sales likely will maintain their current pace throughout the summer, assuming there are no further decreases in job growth that could prompt a pause among repeat buyers.
Here’s a closer look at how existing-home sales performed in May, according to NAR’s latest housing report:
- Home prices: The median existing-home price for all housing types was $239,700 in May, up 4.7 percent from a year ago. That also surpasses the previous peak in median sales prices of $236,300, set last June.
- Days on the market: Properties spent less time on the market in May, selling, on average, after 32 days. That’s below the average time on market a year ago (40 days) and the shortest time since NAR began tracking such data in May 2011. Forty-nine percent of homes sold in May were on the market for less than a month, also the highest percentage since May 2011. Short sales were on the market the longest, at a median of 103 days in May, while foreclosures sold in 51 days. Non-distressed homes took 30 days.
- Housing inventories: Total housing inventory at the end of May increased 1.4 percent month-over-month to 2.15 million existing homes for sale. That is 5.7 percent lower than a year ago. At the current sales pace, unsold inventory represents a 4.7-month supply.
“Existing inventory remains subdued throughout much of the country and continues to lag even last year’s deficient amount,” says 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.”
- All-cash sales: Buyers paying in cash accounted for 22 percent of all transactions in May, down from 24 percent a year ago. Individual investors account for the biggest bulk of all-cash sales. Investors purchased 13 percent of homes in May, down from 14 percent a year ago.
- Distressed sales: Foreclosures and short sales dropped to 6 percent of all sales last month, down from 10 percent a year ago. Foreclosures comprised 5 percent of sales in May while short sales represented 1 percent of sales. On average, foreclosures sold for a discount of 12 percent below market value while short sales were discounted 11 percent.
Here’s how existing-home sales fared across the country in May:
- Northeast: existing-home sales rose 4.1 percent to an annual rate of 770,000, and are now 11.6 percent above a year ago. Median price: $268,600, which is 0.1 percent below May 2015.
- Midwest: existing-home sales fell 6.5 percent to an annual rate of 1.3 million in May but are still 3.2 percent higher than a year ago. Median price: $190,000, up 4.8 percent from a year ago.
- South: existing-home sales rose 4.6 percent to an annual rate of 2.28 million in May and are now 6.5 percent above a year ago. Median price: $211,500, up 5.9 percent from a year ago.
- West: existing-home sales climbed 5.4 percent to an annual rate of 1.18 million in May but are still 1.7 percent lower than a year ago. Median price: $346,900, which is 7.7 percent above a year ago.