RISMEDIA, June 24, 2009
Sales of existing homes showed another gain in May, benefiting from favorable affordability conditions and a first-time buyer tax credit, according to the National Association of Realtors®. May's increase was the first back-to-back monthly gain since September 2005.
Existing-home sales-including single-family, townhomes, condominiums and co-ops-rose 2.4 percent to a seasonally adjusted annual rate of 4.77 million units in May from a downwardly revised level of 4.66 million units in April, but remained 3.6 percent below the 4.95 million-unit pace in May 2008.
Lawrence Yun, NAR chief economist, expected an improvement. "Historically low mortgage interest rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates," he said. "First-time buyers also are being drawn off the sidelines by the $8,000 tax credit, which is helping to absorb inventory. However, the increase in sales is less than expected because poor appraisals are stalling transactions. Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan."
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage edged up to 4.86% in May from a record low 4.81% in April; the rate was 6.04% in May 2008. Last week, Freddie Mac reported the 30-year fixed at 5.38%; data collection began in 1971.
Total housing inventory at the end of May fell 3.5% to 3.80 million existing homes available for sale, which represents a 9.6-month supply2 at the current sales pace, down from a 10.1-month supply in April.
Regionally, existing-home sales in the Northeast rose 3.9% to an annual level of 800,000 in May, but are 10.1% below a year ago. The median price in the Northeast was $243,600, which is 12.5% below May 2008.
Existing-home sales in the Midwest jumped 9.0% in May to a pace of 1.09 million but are 4.4% below May 2008. The median price in the Midwest was $145,800, which is 10.4% lower than a year ago.
In the South, existing-home sales were unchanged at an annual pace of 1.74 million in May but are 8.9% below a year ago. The median price in the South was $157,400, down 9.9% from May 2008.
Existing-home sales in the West slipped 0.9% to an annual rate of 1.14 million in May, but are 11.8% higher than May 2008. The median price in the West was $197,700, down 30.6% from a year ago.
