US second-hand home sales fell in
May after the end of a tax credit program and foreclosure/bank sales amounted to
31% of total sales.
Termed existing-home sales in the US, they 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 sales1, 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
“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
leading advocate for homeownership issues 9 a common argument
when subprime mortgages were mis-sold), NAR said it is is
supporting Senate amendments to extend the home buyer tax credit
closing deadline through September 30th for contracts written by
April 30th, 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 federal mortgage guarantor, 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.
national median existing-home price2 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.
President Vicki Cox Golder, 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,”
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 survey3 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
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 supply4 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 price5 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.
sales, which include single-family, townhomes, condominiums and
co-ops, are based on transaction closings. This differs from the
U.S. Census Bureau’s series on new single-family home sales,
which are based on contracts or the acceptance of a deposit.
Because of these differences, it is not uncommon for each series
to move in different directions in the same month. In addition,
existing-home sales, which generally account for 85 to 90% of
total home sales, are based on a much larger sample – more than
40% of multiple listing service data each month – and typically
are not subject to large prior-month revisions.
The annual rate for a particular month represents what the total
number of actual sales for a year would be if the relative pace
for that month were maintained for 12 consecutive months.
Seasonally adjusted annual rates are used in reporting monthly
data to factor out seasonal variations in resale activity. For
example, home sales volume is normally higher in the summer than
in the winter, primarily because of differences in the weather
and family buying patterns. However, seasonal factors cannot
compensate for abnormal weather patterns.
Single-family data collection began monthly in 1968, while condo
data collection began quarterly in 1981; the series were
combined in 1999 when monthly collection of condo data began.
Prior to this period, single-family homes accounted for more
than nine out of 10 purchases. Historic comparisons for total
home sales prior to 1999 are based on monthly single-family
sales, combined with the corresponding quarterly sales rate for
only valid comparisons for median prices are with the same
period a year earlier due to the seasonality in buying patterns.
Month-to-month comparisons do not compensate for seasonal
changes, especially for the timing of family buying patterns.
Changes in the composition of sales can distort median price
data. Year-ago median and mean prices sometimes are revised in
an automated process if more data is received than was
buyer, investor and distressed sales data are from a survey for
the Realtors Confidence Index, scheduled to be posted June 30.
inventory and month’s supply data are available back through
1999, while single-family inventory and month’s supply are
available back to 1982 (prior to 1999, condos were measured
quarterly while single-family sales accounted for more than 90%
there is a concentration of condos in high-cost metro areas, the
national median condo price generally is higher than the median
single-family price. In a given market area, condos typically
cost less than single-family homes.