Home Prices Rise as Inventory Shrinks in May

June 27, 2012

May Home PricesKeeping with yesterday’s report on new home sales for May, let’s look into the latest information concerning existing-home sales. The National Association of Realtors® released its May report showing that limited supplies of housing inventory held back existing-home sales in May. However, sales continue to remain ahead of year-ago levels as home prices maintain an upward trend throughout the country.

Total existing-home sales (single-family homes, townhomes, condominiums and co-ops) fell 1.5 percent to a seasonally adjusted annual rate of 4.55 million in May from 4.62 million in April. However, May existing-home sales are 9.6 percent above the 4.15 million-unit pace in May 2011.

“The slight pullback in monthly home sales is more likely due to supply constraints rather than softening demand. The normal seasonal upturn in inventory did not occur this spring,” NAR chief economist Lawrence Yun said. “Even with the monthly decline, home sales have moved markedly higher with 11 consecutive months of gains over the same month a year earlier.”

Having to deal with a housing shortage is good news for sellers and builders and it is making realtors ask for something strange in the current real estate market: Foreclosures.

“Realtors® in Western states have been calling for an expedited process to get additional foreclosed properties onto the market because they have more buyers than available property,” Yun said.

Total housing inventory at the end of May sat at 2.49 million existing homes available for sale representing a 6.6. month supply at the current sales pace.

Listed inventory is 20.4 percent below a year ago when there was a 9.1-month supply.

“The recovery is occurring despite excessively tight credit conditions and higher down payment requirements, which are negating the impact of record high affordability conditions,” Yun said.

The national median existing-home price for all housing types climbed upwards to $182,600, resulting in a 7.9 percent increase over a year ago. This also represents the third straight month of year over year price gains.

Twenty-five percent of May home sales went to foreclosures and short sales (15 percent were foreclosures, 10 percent were short sales). Foreclosures in May sold for 19 percent below market value while short sales sold for 14 percent below market value.

The rest of May’s stats:

  • Single-family home sales slipped 1.0 percent to a seasonally adjusted annual rate of 4.05 million in May.
  • Existing condominium and co-op sales fell 5.7 percent to a seasonally adjusted annual rate of 500,000 in May.
  • Regionally, existing-home sales in the Northeast fell 4.8 percent to an annual level of 590,000 in May.
  • Existing-home sales in the Midwest rose 1.0 percent in May to a pace of 1.04 million.
  • Existing-home sales in the South slipped 0.6 percent to an annual level of 1.78 million in May.
  • Existing-home sales in the West declined 3.4 percent to an annual pace of 1.14 million in May.

About The Author

Read All Stories By Mitch Levinson

Mitch Levinson is the author of “Internet Marketing: The Key to Increased New Home Sales” published by BuilderBooks. He is an Internet marketing expert with expertise in search engine optimization, website development, email marketing, social media and CRM consulting services. He is known for creating effective programs that can be tracked through analytics to prove effectiveness and ROI. Mitch is founder and president of MLC New Home Marketing and MLC FlatFee Realty, as well as managing partner of mRELEVANCE, LLC, a Marketing, Communication, Interactive agency with offices in Chicago and Atlanta. He currently leads the Chicago team. A Multi-Million Dollar Sales Producer who earned an MBA in Computer Information Systems and eCommerce, he brings a unique perspective and experience to the field of real estate communications. Mitch combines the two interests in order to help home builders and developers gain a competitive advantage through the Internet and technology. When he isn’t behind a computer, he enjoys participating in sports and coaching his kids’ teams. Mitch resides in Arlington Heights, Ill., a northwest suburb of Chicago, with his family, which includes two rambunctious labs. Visit my Google+ profile.

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