The existing home sales report for May just came out. Here’s what the figures showed …
* Existing home sales gained 2.4% to a seasonally adjusted annual rate of 4.77 million units from 4.66 million in April. That was slightly below forecasts for a reading of 4.82 million and down 3.6% from 4.95 million a year earlier.
* Single-family sales climbed 1.9%, while condo and cooperative sales rose 6.1%. Regionally, sales were mixed. They rose 3.9% in the Northeast and 9% in the Midwest. But transaction volume was unchanged in the South and down 0.9% in the West.
* The raw number of homes for sale fell 3.5% to 3.798 million units from 3.937 million in April. That was also down 15.3% from a year earlier. The months supply at current sales pace indicator of inventory dropped to 9.6 from 10.1, with single family inventory falling to 9 from 9.5 and condo inventory slipping to 15 from 15.4.
* The median price of an existing home rose 3.8% to $173,000 from $166,600 in April. That was down 16.8% from $207,900 in the year-ago period.
We saw another month of modest improvement in the housing sector in May. Existing home sales rose, led by the Midwest region. Sales were particularly strong in the condo sector, while the supply of homes on the market dipped. The biggest fly in the ointment continues to be pricing. It remains weak, with yet another double-digit decline from year-earlier levels showing up in the data.
Stepping back for a moment and looking at the big picture, it’s clear that the housing sector is no longer in freefall. But neither is it rebounding strongly. We’re seeing modest declines in inventory, modest improvement in sales, and some tentative signs of stabilization in pricing. But that’s it. And that should come as no surprise. We just experienced the longest, largest housing bubble in U.S. history. As a result, the recovery process will be a long, drawn-out affair.
Another thing to keep an eye on: Mortgage rates. They didn’t begin to rise significantly until late May. Since the existing home sales figures are based on contract closings, rather than contract signings, the impact of higher rates wasn’t captured in this report. We’ll likely see housing demand trail off as we head deeper into the summer unless financing costs ease back.
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{ 2 comments… read them below or add one }
Whenever I see the housing data, I find myself asking the following questions:
1. Does the sales figure include auctions–tax & foreclosure? And what is the percentage compared historically?
2. Does the number of units for sale include FSBOs (for sale by owner)? If yes, then how is this number estimated?
Finally, 3. If you drive around, you begin to notice many homes sitting empty with no signage in the yard and no listing on the real estate listing service, is this even being considered in the number available?
Still having trouble seeing the positive when I can’t even see how the numbers correlate to reality.
Good report.
I’m sorry, but I don’t see that much positive in the numbers today. I know in Arizona, May through July is the busiest for real estate, so if the summer months are the busiest in most states, I don’t see how a slight uptick (yet below expectations) in May is positive news.