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NAR: Existing-Home Sales Down Almost 1% in May

WASHINGTON – National existing-home sales decreased for a fourth straight month in May, according to the National Association of Realtors® (NAR). Only one major U.S. region recorded a month-over-month increase, while the other three regions saw sales decline.

However, each of the four areas again registered double-digit year-over-year gains, though in May 2020, nationwide pandemic restrictions affected some home sales.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – dropped 0.9% from April to a seasonally-adjusted annual rate of 5.80 million in May. Sales in total climbed year-over-year, up 44.6% from a year ago (4.01 million in May 2020).

“Home sales fell moderately in May and are now approaching pre-pandemic activity,” says Lawrence Yun, NAR’s chief economist. “Lack of inventory continues to be the overwhelming factor holding back home sales, but falling affordability is simply squeezing some first-time buyers out of the market.”

Still, Yun calls the market encouraging. “Supply is expected to improve, which will give buyers more options and help tamp down record-high asking prices for existing homes.”

The median existing-home price for all housing types in May was $350,300, up 23.6% from May 2020 ($283,500), and every U.S. region registered price increases. It’s a record high and marks 111 straight months of year-over-year gains since March 2012.

Total housing inventory at the end of May amounted to 1.23 million units, up 7.0% from April’s inventory and down 20.6% from one year ago (1.55 million). Unsold inventory sits at a 2.5-month supply at the present sales pace, marginally up from April’s 2.4-month supply but down from 4.6-months in May 2020.

Properties typically remained on the market for 17 days in May, unchanged from April and down from 26 days in May 2020. Of homes on the market in May, nine out of 10 (89%) were on the market for less than a month.

First-time buyers were responsible for 31% of sales in May, even with April but down from 34% in May 2020.

Individual investors or second-home buyers, who account for many cash sales, purchased 17% of homes in May, unchanged from April and up from 14% in May 2020. All-cash sales accounted for 23% of transactions in May, down from 25% in April and up from 17% in May 2020.

Distressed sales – foreclosures and short sales – represented less than 1% of sales in May, equal to April’s percentage but down from 3% in May 2020.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 2.96% in May, down from 3.06% in April. The average commitment rate across all of 2020 was 3.11%. Yun expects the 30-year fixed-rate mortgage to remain below 3.5% in 2021.

Single-family and condo/co-op sales: Single-family home sales dropped to a seasonally adjusted annual rate of 5.08 million in May, down 1.0% from 5.13 million in April and up 39.2% from one year ago. The median existing single-family home price was $356,600 in May, up 24.4% from May 2020.

Existing condominium and co-op sales were at a seasonally adjusted annual rate of 720,000 units in May, unchanged from April but up 100.0% from one year ago. The median existing condo price was $306,000 in May, an annual increase of 21.5%.

“As outlined in last week’s NAR/Rosen Consulting Group report, we continue to face a dire shortage of available housing in this country,” says NAR President Charlie Oppler. “NAR continues its advocacy efforts to find new, creative and effective ways to increase housing construction and supply. The right policies will provide huge benefits to our nation’s economy, and our work to close this gap will be particularly impactful for lower-income households, households of color and first-time buyers.”

Regional breakdown: For the second straight month, only the Midwest experienced higher sales month-to-month. Existing-home sales in the Northeast decreased 1.4% in May, but the annual rate of 720,000 is a 46.9% jump from a year ago. The median price in the Northeast was $384,300, up 17.1% from May 2020.

Existing-home sales in the Midwest rose 1.6% to an annual rate of 1,310,000 in May, a 27.2% increase from a year ago. The median price in the Midwest was $268,500, an 18.1% increase from May 2020.

Existing-home sales in the South declined 0.4%, posting an annual rate of 2,590,000 in May, up 47.2% from the same time one year ago. The median price in the South was $299,400, a 22.6% jump from one year ago.

Existing-home sales in the West fell 4.1%, recording an annual rate of 1,180,000 in May, a 61.6% climb from a year ago. The median price in the West was $505,600, up 24.3% from May 2020.

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