June 22, 2012 – Sales of existing homes slowed in May, but NAFCU believes the housing market is still recovering, albeit slowly.
The National Association of Realtors reported Thursday that existing-home sales in May fell 1.5 percent to 4.55 million units on a seasonally adjusted, annualized basis.
NAFCU Chief Economist David Carrier called the data “disappointing,” but he said the report wasn’t entirely bad news. “Distressed sales made up a lower share of total sales than at any point since the National Association of Realtors started tracking them in 2008,” he noted. “This has caused median prices to increase significantly in recent months.”
In May, the median home price of an existing home, non-seasonally adjusted, rose 5.1 percent to $182,600, up 7.9 percent from a year ago.
With higher prices for existing homes in May, many would-be homebuyers remained on the sidelines. Sales of single-family homes were down 1 percent, while sales of condominiums were down 5.7 percent from April.
Three of the four housing regions reported monthly sales declines. The Northeast reported the steepest decrease (-4.8 percent), followed by the West (-3.4 percent), and the South (-0.6 percent). The Midwest reported positive but relatively meager sales growth (1 percent).
On a year-over-year basis, existing-home sales were up 9.6 percent; sales were up in all four housing regions. From June 2011, existing-home sales over $250,000 were up more than 20 percent.
The inventory level fell 0.4 percent on a monthly basis and was down 20.4 percent from a year ago, resulting in 2.49 million unsold homes in the market. “Based on May sales, this represents 6.6 months of supply, which is up from the 6.5 months of supply based on April sales,” Carrier said.
In separate data, RealtyTrac reported that foreclosure activity jumped 9 percent in May. “More foreclosure starts are ending up as short sales this year, which typically do not have as deep a discount as bank-owned sales,” Carrier said. “Looking ahead, it’s likely we’ll see more distress sales, which will push prices back down.”
However, NAFCU’s outlook on the housing market remains unchanged, he added. “We still expect to see further progress, but it will come slowly and not without some bumps along the way.”
For more, see NAFCU’s Macro Data Flash (login required).