Existing Home Sales Stutter Slightly in May, Down 0.9 Percent, But Median Price Surges to an All-Time Record Greater Than $350,000

Existing home sales slipped 0.9 percent in May 2021 compared to April based on the Seasonally Adjusted Annualized Rate (SAAR) according to the National Association of Realtors® (NAR). Actual closings in May 2021 (not seasonally adjusted) were up 2.9 percent vs April. Given the plunge in sales from April to June in 2020 due to the pandemic, year-over-year comparisons for home sales metrics are relatively meaningless. The current 5.8 million sales rate is the most seen in 14 years.

The following graphs both show median prices, but the first uses the SAAR sales rate while the second lists the total number of actual home closings in the prior 12-months. Median price rocketed up 23.6 percent vs the prior year to an all-time record of $350,300.

Monthly sales (not seasonally adjusted) are shown commencing 2019. While comparison to 2020 has no merit, note that May 2021 sales were down slightly from May 2019. This is perhaps an indicator of diminished demand as more people now feel safe for vacations and other activities away from home.

Higher-priced home demand continues to grow, with $1 million and up single-family home sales jumping 244.5 percent compared to May 2020 while sales priced from $250,000 to $500,000 rose 47.9 percent. Regardless of the price range, the typical home was on the market less than 20 days prior to receiving an accepted purchase offer.

Months inventory is tracked in the next table since 2016. Prior to the pandemic, 6 months of inventory was considered normal with supply and demand in balance. The 2.4 months of available inventory in May was less than one-half of normal.

Sales for the first of the year are detailed in the next table.

Other details in NAR’s press release included:

• Distressed sales made up less than 1 percent of house transactions in May, down from 3 percent one-year ago
• Housing inventory saw 1.23 million listings available as of the end of May, down 20.6 percent from one-year ago but 7.0 percent sequentially from April
• 31 percent of May closings went to first-time homebuyers, down from what used to be 40 percent in previous decades
• Vacation home sales made up 6.7 percent of sales year-to-date, but are a staggering 57.2 percent from the prior year
• Investors purchased 17 percent of the homes sold in May
• Buyers paid all-cash in 23 percent of the transactions

To read the complete NAR press release click https://www.nar.realtor/newsroom/existing-home-sales-experience-slight-skid-of-0-9-in-may

It may be that housing sales are returning to more normal volumes as evidenced by the May sales numbers in 2021 almost mirroring May 2019. Freddie Max reported interest rates remained in the highly affordable range at 3.02 percent for loan commitments in the past seven days. As more people became vaccinated or essentially immune from COVID and interest rates rise, expect housing sales and price gains to moderate.

Ted