May’s Existing-Homes Sales Grow at Highest Pace in 9 Years!

According to the National Association of Realtors’ (NAR) monthly report, May 2016 existing-home sales have reached their highest pace in almost a decade, while the spring’s uptick in demand amidst lagging supply levels pushed the median sales price to an all-time high.

Sales rose in three of the four major regions of the U.S. to reflect a national 1.8% increase over April. A noticeable monthly dropoff in the Midwest (-6.5%) was not enough to prevent the nation from seeing its highest annual pace since February 2007.

NAR’s chief economist, Lawrence Yun, commented on the continued momentum of the housing market:

“This spring’s sustained period of ultra-low mortgage rates has certainly been a worthy incentive to buy a home, but the primary driver in the increase in sales is more homeowners realizing the equity they’ve accumulated in recent years and finally deciding to trade-up or downsize…. Barring further deceleration in job growth that could ultimately temper demand from these repeat buyers, sales have the potential to mostly maintain their current pace through the summer.”

 

Existing-home sales, May 2015 vs May 2016

The U.S. May median existing-home price for all housing types (single-family homes, townhomes, condominiums, and co-ops) was $239,700, a 4.7% increase from May 2015 ($228,900). May now marks the 51st consecutive month of year-over-year gains. Regionally, the median price in the South was $211,500, up 5.9% from one year ago. Locally, Beverly-Hanks reported in our Q1 Market Report a median home price of $210,000, up from $192,250 in Q1 2015.

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Region

Median Home Price

(May 2016)

Median Price Increase

(May 2015 to May 2016)

U.S.

$239,700

+6.3%

South

$211,500

+5.9%

WNC

$210,000 (Q1)

+9.2% (Q1)

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Median home sales, May 2015 vs May 2016

Total housing inventory was also up 1.4% since April, but still well below inventory levels last year. Yun continued:

“Existing inventory remains subdued throughout much of the country and continues to lag even last year’s deficient amount,” said Yun. “While new home construction has thankfully crept higher so far this year, there’s still a glaring need for even more, to help alleviate the supply pressures that are severely limiting choices and pushing prices out of reach for plenty of prospective first-time buyers.”

Are First-Time Home Buyers being Left Behind?

The pace of home sales is unfortunately still leaving one population behind: first-time home buyers. “With first-time buyers still struggling to enter the market, repeat buyers using the proceeds from the sale of their previous home as their down payment are making up the bulk of home purchases right now,” said Yun.

A recently released NAR survey addresses home buying opportunities of student debt borrowers who are current in their repayment. The findings affirmed the idea that heavy student loan burdens are contributing to the low homeownership rates among young adults and the underperforming share of first-time buyers.

“In addition to policy proposals that streamline income-based repayment programs and allow student loan borrowers the ability to refinance into lower rates, NAR supports those that promote student loan simplification, clarity, and education. Furthermore, it’s important that mortgage underwriting guidelines related to student loan debt are standardized and do not impair homeownership opportunities,” said NAR President Tom Salomone.

Read more about existing-home sales on NAR, or view the Beverly-Hanks Quarterly Market Report to see how home sales are growing in your community.

 

 

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