Existing Home Sales Increase

From DS News June 20, 2013

Existing-home sales rose a solid 4.2 percent in May to an annual sales rate of 5.18 million, the highest level since November 2009, the National Association of Realtors (NAR) reported Thursday. Economists had expected existing home sales to hit 5.0 million. The median price of an existing home jumped $16,200 (8.4 percent) for the month and was up $27,700 (15.4 percent) from May 2012. The inventory of homes for sale rose to 2.22 million from 2.15 million in April, translating to a 5.1 month supply compared with April’s 5.2 month supply.

The 210,000 increase in the seasonally adjusted annual sales rate was the largest since last August, when the sales pace jumped 240,000 to 4.84 million. According to NAR, sales in May were up 12.9 percent over May 2012, the 16th straight month of year-over-year sales gains. By the numbers, the sales rate was 590,000 ahead of May 2012, the sharpest year-over-year increase since August 2011, when sales were up 730,000 over the year earlier pace.

The NAR report tracks completed transactions and closings and followed a 1.5 point gain in the NAR’s own pending home sales index for March. The index improved 0.3 percent in April, hinting closings may not grow as quickly next month. At $208,000 in May, the median sales price topped $200,000 for the first time since August 2008, when it was $203,200 and falling from the record $230,300 in July 2006. The median price, as reported by NAR, has increased for four straight months. The median price has increased on a yearly basis for 15 straight months.

The average price of a new home increased $24,500 in May to $269,600, the highest level since May 2008, when it was $278,400. It remained below the record $292,200 in June 2007. Year-over-year, the May average was up $29,600 (10.0 percent), the strongest percentage gain since the 10.6 percent gain from June 2001 to June 2002 and the largest dollar gain since August 2005, when the average price was $37,000 higher than one year earlier. Those price increases, however, have not been accompanied by an increase in the inventory of homes for sale. In the same 15 months, the inventory of homes for sale has dropped to 2.22 million from 2.32 million, though it has increased in each of the last four months.

Inventories continue to be plagued by competition with sales of lower priced “distressed” homes. According to the NAR, distressed homes—foreclosures and short sales—accounted for 18 percent of May sales, unchanged from April but matching the lowest share since monthly tracking began in October 2008.

Fewer distressed homes, which generally sell at a discount, account for some of the price gain, the NAR said. Foreclosures accounted for 11 percent of May sales, and short sales made up 7 percent. Foreclosures, NAR said, sold for an average discount of 15 percent below market value in May, while short sales were discounted 12 percent.

After falling to a cyclical low in August 2010, existing-home sales have been improving steadily, helped in part by the federal homebuyer tax credit program. Sales in the last 12 months have averaged 4,858,000, up from 4,386,000 in the previous 12 months. The median time on market for all homes was 41 days in May, down from 46 days in April, and was 43 percent faster than the 72 days on market in May 2012. The median time on the market, NAR said, is the shortest since monthly tracking began in May 2011. First-time buyers accounted for 28 percent of purchases in May, down from 29 percent in April and 34 percent in May 2012. All-cash sales were 33 percent of transactions in May, up from 32 percent in April and 28 percent in May 2012.

Regionally, existing-home sales in the Northeast were up 1.6 percent to an annual rate of 650,000 in May, 8.3 percent above May 2012.
The median price in the Northeast was $269,600, up 10.0 percent for the month and 12.3 percent from a year ago.
Existing-home sales in the Midwest jumped 8.0 percent in May—the largest gain of any of the four Census regions—to 1.21 million and were 16.3 percent higher than a year earlier. The median price in the Midwest was $159,800, up 7.5 percent over April and 8.2 percent from May 2012.
In the South, existing-home sales rose 4.0 percent to an annual level of 2.09 million in May and were 16.1 percent above May 2012. The median price in the South was $183,300, 9.2 percent higher than in April and 15.0 percent above a year ago.
Existing-home sales in the West increased 2.5 percent to a pace of 1.23 million in May and were 7.0 percent above a year ago.
The median price in the West was $276,400, up 4.1 percent from April and 19.9 percent from May 2012.

Hear Mark Lieberman every Friday on P.O.T.U.S. Radio, Sirius-XM 124, at 6:20 a.m. Eastern.