Though existing-home sales dropped 9.7% month over month in May—the third consecutive month of declines—the downward trend is likely to soon reverse, according to the National Association of REALTORS®. “Although the real estate industry faced some very challenging circumstances over the last several months, we’re seeing signs of improvement and growth, and I’m hopeful the worst is behind us,” says NAR President Vince Malta.
Ongoing complications due to the coronavirus pandemic led total existing-home sales—which include completed transactions for single-family homes, townhouse, condos, and co-ops—to fall a whopping 26.6% from a year ago, with all four major regions of the U.S. seeing sales dips, NAR reported Monday. But NAR Chief Economist Lawrence Yun says May's figures reflect March and April sales contracts “during the strictest times of the pandemic lockdown. Home sales will surely rise in the upcoming months with the economy reopening and could even surpass annual figures in the second half of the year.”
Despite the declining sales, home prices are holding firm. Buoyed by low inventory, the median existing-home price for all housing types in May was $284,600, up 2.3% from a year ago, NAR reports. Prices rose in every region of the U.S. But low inventory also is problematic for home buyers seeking greater selections. At the end of May, a total of 1.55 million units were for sale, up 6.2% from April but down 18.8% from a year ago. Unsold inventory is currently at a 4.8-month supply at the current sales pace. “New-home construction needs to robustly ramp up in order to meet rising housing demand,” Yun says. “Otherwise, home prices will rise too fast and hinder first-time buyers, even at a time of record low mortgage rates.”
Here are additional findings from NAR’s latest housing report, reflecting data for May:
- Days on the market: Fifty-eight percent of homes sold were on the market for less than a month. Properties typically stayed on the market for 26 days, the same as a year ago.
- First-time buyers: First-time home shoppers comprised 34% of sales, up from 32% a year earlier.
- Investors and second-home buyers: Individual investors and second-home buyers purchased 14% of homes, up from 13% a year ago. Investors tend to account for the bulk of all-cash sales, which comprised 17% of sales, down from 19% a year ago.
- Distressed sales: Foreclosures and short sales represented just 3% of sales, up from 2% a year ago.
Sales Breakdown by Region
Here’s how home sales fared in May across the country:
- Northeast: Existing-home sales dropped 13% compared to April, reaching an annual rate of 470,000—a 29.9% drop compared to a year ago. Median price: $327,900, up 7.8% from a year ago.
- Midwest: Existing-home sales decreased 10% to an annual rate of 990,000, down 20.2% from a year ago. Median price: $227,400, up 3% from a year ago.
- South: Existing-home sales dropped 8% to an annual rate of 1.73 million, down 25.1% from a year ago. Median price: $247,400, a 2.1% increase from a year ago.
- West: Existing-home sales dropped 11.1% to an annual rate of 720,000—a 35.1% decrease compared to a year ago. Median price: $408,400, down 0.2% from a year ago.
