Existing home sales dip in May as inventory tightens and prices rise, according to realtors group.
The pace of existing home sales dipped in May, but remains substantially higher than a year ago, according to a report released today by the National Association of Realtors, which attributes the monthly decline to tight inventory.
Existing home sales fell to an annual rate of 4.55 million in May, down 1.5 percent from the 4.62 million pace in April, but 9.6 percent higher than the 4.15 million pace set in May 2011, according to the association. Existing home sales data reflect completed transactions for single-family homes, townhomes, condominiums and co-ops.
“The slight pullback in monthly home sales is more likely due to supply constraints rather than softening demand,” Lawrence Yun, the association’s chief economist, said in a statement. “The normal seasonal upturn in inventory did not occur this spring.”
Inventory of existing homes fell 0.4 percent in May and is down more than 20 percent from a year ago. According to Yun, supply is particularly short in Florida and the Western states. As inventory tightens, prices are rising and have posted gains for the past three consecutive months. Since May 2011, the national median existing home price has risen 7.9 percent to $182,600. Yun attributes some of the gain to a lower share of distressed homes in the existing home sales mix. Distressed homes accounted for 25 percent of existing homes sales in May, down from 28 percent in April and 31 percent last May.
Tight credit conditions continue to constrain existing home sales, though affordability remains at record highs, Yun said. In a separate announcement today, Freddie Mac reported record-low rates for 30-year fixed-rate and five-year ARM mortgages. The average rate for a 30-year fixed-rate mortgage was 3.66 percent (with an average 0.7 point) for the week ending June 21, down from 3.71 percent last year week. A year ago, 30-year fixed-rate mortgages averaged 4.5 percent.
Five-year Treasury-indexed adjustable-rate mortgages averaged 2.77 percent this week (with an average of 0.6 points) for the week ending today. A year ago, the average was 3.25 percent. Fifteen-year fixed rate mortgages averaged 2.95 percent this week (with an average 0.6 point) down from 2.98 percent last week, and 3.69 percent a year ago.
“Treasury bond yields eased somewhat this week on some worsening economic indicators bringing mortgage rates back into record low territory,” Frank Nothaft, vice president and chief economist, Freddie Mac, said in a statement.
Earlier this week, the National Association of Home Builders reported a modest monthly gain in builder confidence in June. The NAHB Housing Market Index rose one point to 29 in June, the highest level since May of 2007. The increase is in line with the association’s forecast for gradually improving single-family home sales in 2012, but the economy appears to be weakening and overly tight lending standards and inaccurate appraisals remain “major obstacles” to sales,” David Crowe, NAHB chief economist, said in a statement.
The rate of new home construction fell 4.8 percent from April to May, according to data released on Tuesday by the U.S. Commerce Department, but the number of permits issued – a forward looking indicator – rose 7.9 percent in the last month.