RISMEDIA, June 23, 2010—Existing-home sales remained at elevated levels in May on buyer response to the tax credit, characterized by stabilizing home prices and historically low mortgage interest rates, according to the National Association of Realtors. Gains in the West and South were offset by a decline in the Northeast; the Midwest was steady.
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, were at a seasonally adjusted annual rate of 5.66 million units in May, down 2.2% from an upwardly revised surge of 5.79 million units in April. May closings are 19.2% above the 4.75 million-unit level in May 2009; April sales were revised to show an 8.0% monthly gain.
Lawrence Yun, NAR chief economist, said he expects one more month of elevated home sales. “We are witnessing the ongoing effects of the home buyer tax credit, which we’ll also see in June real estate closings,” he said. “However, approximately 180,000 home buyers who signed a contract in good faith to receive the tax credit may not be able to finalize by the end of June due to delays in the mortgage process, particularly for short sales.
“In addition, many potential sales are being delayed by an interruption in the National Flood Insurance Program. Florida and Louisiana, also impacted by the oil spill, have the highest percentage of homes that require flood insurance.”
As the leading advocate for homeownership issues, NAR is supporting Senate amendments to extend the home buyer tax credit closing deadline through September 30 for contracts written by April 30, and to renew the flood insurance program. “Sales and related local economic activity would have been higher without delays in the closing process or flood insurance issues,” Yun noted.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.89% in May from 5.10% in April; the rate was 4.86% in May 2009.
The national median existing-home price for all housing types was $179,600 in May, up 2.7% from May 2009. Distressed homes slipped to 31% of sales last month, compared with 33% in April; it was also 33% in May 2009.
NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said home prices have been stabilizing all year. “With distressed sales at roughly the same level as a year ago, the gain in home prices is a hopeful sign that the market is in a good position to stand on its own without further government stimulus,” she said.
“Very affordable mortgage interest rates and stabilizing home prices are encouraging home buyers who were on the sidelines during most of the boom and bust cycle,” Golder said.
Pending home sales are expected to decline notably in May and June from the spring surge, but Yun added that job growth and a manageable level of foreclosures are keys to sales and price performance during the second half of the year.
A parallel NAR practitioner survey shows first-time buyers purchased 46% of homes in May, down from 49% in April. Investors accounted for 14% of transactions in May compared with 15% in April; the remaining sales were to repeat buyers. All-cash sales were at 25% in May, edging down from a 26% share in April.
Total housing inventory at the end of May fell 3.4% to 3.89 million existing homes available for sale, which represents an 8.3-month supply at the current sales pace, compared with an 8.4-month supply in April. Raw unsold inventory is 1.1% above a year ago, but is still 14.9% below the record of 4.58 million in July 2008.
Single-family home sales declined 1.6% to a seasonally adjusted annual rate of 4.98 million in May from a pace of 5.06 million in April, but are 17.5% above the 4.24 million level in May 2009. The median existing single-family home price was $179,400 in May, which is 2.7% above a year ago.
Single-family median existing-home prices were higher in 16 out of 20 metropolitan statistical areas reported in May from a year ago. In addition, existing single-family home sales rose in 18 of the 20 areas from May 2009.
Existing condominium and co-op sales fell 6.8% to a seasonally adjusted annual rate of 680,000 in May from 730,000 in April, but are 32.6% above the 513,000-unit pace in May 2009. The median existing condo price was $181,300 in May, up 3.4% from a year ago.
Regionally, existing-home sales in the Northeast fell 18.3% to an annual level of 890,000 in May from a surge in April, but are 12.7% higher than a year ago. The median price in the Northeast was $240,200, down 2.2% from May 2009.
Existing-home sales in the Midwest were unchanged in May at a pace of 1.33 million and are 22.0% above May 2009. The median price in the Midwest was $150,700, up 2.2% from a year ago.
In the South, existing-home sales increased 0.5% to an annual level of 2.15 million in May and are 22.9% above a year ago. The median price in the South was $159,000, up 1.0% from May 2009.
Existing-home sales in the West rose 4.9% to an annual rate of 1.29 million in May and are 15.2% higher than May 2009. The median price in the West was $221,300, up 7.4% from a year ago.
For more information, visit www.realtor.org.