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Home sales slip for fourth consecutive month, yet spike annually

(REAL ESTATE) While murmurs of a housing bubble permeate the market, home sales slide and inventory levels remain wildly restrictive.

home price

Despite bidding wars in many areas of America, existing home sales dipped 0.9% from April to May, according to the National Association of Realtors (NAR), marking the fourth month in a row of small declines. Meanwhile, amidst fears of a housing bubble, all regions saw double digital annual gains.

Sales are “approaching pre-pandemic activity,” said NAR’s Chief Economist, Dr. Lawrence Yun. “Lack of inventory continues to be the overwhelming factor holding back home sales, but falling affordability is simply squeezing some first-time buyers out of the market.”

“The market’s outlook, however, is encouraging,” Yun continued. “Supply is expected to improve, which will give buyers more options and help tamp down record-high asking prices for existing homes.”

MBA AVP of Economic and Industry Forecasting, Joel Kan also sees a silver lining. He said, “One positive development was the 7 percent increase in for-sale inventory, which should slightly help price conditions.”

The median home price in May rose 23.6% over the year to $350,300, a record high and the 111th consecutive month of year-over-year gains.

The average days on market was unchanged for the month, remaining at 17 days, down from 26 days in May 2020. Fully 89% of homes sold in the month were on the market for less than 30 days.

Dr. Yun expects the 30-year fixed rate mortgage to remain below 3.5% in 2021, with a rate of 2.96% in May, down from 3.06% in April, according to Freddie Mac.

In the Northeast, sales fell 1.4% in May, but skyrocketed 46.9% from May 2020. The median price rose 17.1% annually to $384,300.

The Midwest experienced a 1.6% uptick for the month, and 27.2% for the year. The median price rose 18.1% for the year to $268,500.

In the South, sales slid 0.4%, up a whopping 47.2% from May 2020. Here, the median price rose 22.6% to $299,400.

Finally, home sales in the West declined 4.1% for the month, but saw a 61.6% increase from the previous May. Sale prices rose 24.3% over the year to $505,600.

NAR recently called on lawmakers to take “immediate” and “once-in-a-generation” action regarding the current housing supply crisis, so we’ll be watching for how the market is impacted in coming months.

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The American Genius' real estate section is honest, up to the minute real estate industry news crafted for industry practitioners - we cut through the pay-to-play news fluff to bring you what's happening behind closed doors, what's meaningful to your practice, and what to expect in the future. We're your competitive advantage. The American Genius, LLC Copyright © 2005-2022