Home Sales are Not Helping the Economy
Existing Home Sales, which are completed transactions that include single family homes, condominiums, and co-ops, fell by 3.8% in May, at an annual pace of 4.81 million, down 15.3% from last years mark of 5.68 million by the same point in the year.
According to Lawrence Yun, National Association of Realters’ Chief Economist, the market underperformed in May, “Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May…Current housing market activity indicates a very slow pace of broader economic activity, but recent reversals in oil prices are likely to mitigate the impact going forward. The pace of sales activity in the second half of the year is expected to be stronger than the first half, and will be much stronger than the second half of last yea.”
The National Average Commitment Rate to a 30 year mortgage fixed rate mortgage was unchanged from earlier marks 4.64% but down from last year’s level of 4.89%. The national median home price was $166,500, down over 4.6% since last year. Total housing inventory at the end of May fell 1% to 3.72 million existing homes for sale, a significant supply decrease from April. Distressed homes accounted for 31% of all sales in the month of May, a 6% drop off from last month, and sold at an average of 20% below the median market price.
Regionally there were some significant disparities in the data as well. The Northeast seems to be slowly waking from the slumping market, posting a home sales decline of 2.5% in May, down from over 7% in April. Other regions fared worse, such as the Midwest, where home sales fell by 6.4%, and the South, where sales declined by 5.1% in May, accelerated from a 1% drop in April.