Existing home sales declined for a second consecutive month
The United States National Association of Realtors (or NAR) releases a monthly report on the existing home sales (ITB) market. Trends in existing housing inventory, total housing inventory, median home prices, and the mortgage rates are released through this report. Investors can assess the appetite of home buyers in the secondary housing market (REM) through this report.
As per the latest report from NAR, existing home sales have fallen 0.4% to a seasonally adjusted annual rate of 5.43 million homes in May as compared to 5.45 million homes in April. Sales are now 3.0% below the level of sales in the previous year.
Reason for the decline in sales
The reason for the consecutive declines in existing home sales was a lack of available listings that is keeping prospective buyers away from the market. The lack of inventory and the shifting preference of consumers for newly built homes is likely to impact this segment of the housing market in the future.
The average commitment rate for a 30-year mortgage increased for the seventh straight month to 4.59% from 4.47% in April, moving closer to the September 2013 high of 4.49%.
Lawrence Yun, the chief economist of NAR, said that existing home sales were affected by the abrupt mortgage rate hikes this spring, price increases, and heavy competition in the entry-level market.
Price and inventory trends in the housing market
YoY house prices in the US have increased for 75 consecutive months. The median existing home price (FTY) in the US in May was $264,800, up by 4.9% from the same period in the previous year. Total housing (EQR) inventory has increased by 2.8% to 1.9 million listings but is still lagging the previous year’s inventory by 6.1%. Close to 58% of total units sold in May stayed on the market for less than 30 days, indicating the shortage of listings in the existing home segment. In the next part of this series, we’ll analyze the rebound of new home (IYR) sales in May.