May existing home sales dropped again, following a decline that began in April. Is this the start of a trend? The coming months will tell. Prices increased again, as they have for over 6 years. The pace of sales was the same as April, with days on the market well below 30. The median existing home price increased nationally, hitting an all-time high. The market story hasn’t changed: The persistent lack of inventory dominates the narrative.
May existing home sales dropped by 0.4 percent compared to April, and were 3.0 percent lower than May 2017, according to the National Association of Realtors® (NAR) May Existing Home Sales Report, released June 20th. This is the third month of year-over-year decreases.
Inventory rose from April to May (as you might expect in a prime selling month), but only by 2.8 percent, and year-over-year it was 6.1 percent lower. Inventory has now fallen year-over-year for 36 months in a row. The supply of unsold inventory was 4.1 months, down from 4.2 months a year ago.
Home prices continued to increase year-over-year. The median price of existing homes sold in May was a record-high $264,800, up 4.9 percent from May 2017 ($252,500). We’re now at 75 consecutive months of year-over-year increases.
Days on the market (DOM) were unchanged from April, staying at 26. A year ago, homes typically stayed on the market for 27 days, so the sales pace has increased slightly year-over-year.
According to NAR chief economist Lawrence Yun, a solid economy and job market should be generating a much stronger sales pace than what has been seen so far this year. “Closings were down in a majority of the country last month and declined on an annual basis in each major region,” he said. “Incredibly low supply continues to be the primary impediment to more sales, but there’s no question the combination of higher prices and mortgage rates are pinching the budgets of prospective buyers, and ultimately keeping some from reaching the market.”
Sales declined regionally, with one exception: The Northeast. Sales in that region grew by 4.6 percent, but that’s still 11.7 percent lower year-over-year. The Northeast was also the only region to see a decline in prices, with a 1.8 percent drop from May 2017. The West led price increases with a 7.2 percent increase. In an interesting shift, California metros no longer dominate the hottest metro areas list (measured by days on the market/listing views per property). The Top 10 are Midland, TX, Boston-Cambridge-Newton, MA-NH, San Francisco-Oakland-Hayward, CA, Columbus, OH, Vallejo-Fairfield, CA, Boise City, ID, Stockton-Lodi, CA, Buffalo-Cheektowaga-Niagara Falls, NY, Grand Rapids-Wyoming, MI, and Fort Wayne, IN.
If you’re selling, congratulations. You will probably receive multiple offers and be able to sell quickly. If you’re buying, it’s time to get organized. You have to be ready to make a strong offer as soon as you find the home you want. Make sure your offer includes financing by meeting with a First Choice Loan Services Inc. loan originator now. Once you have a pre-underwriting approval or preapproval, you’ll be able to include a First Choice Priority Buyer Letter with your offer to show that you are a serious buyer. That’s the First Choice advantage.