The latest report from the National Association of Realtors® (NAR) reveals a modest increase in existing-home sales for May. While the numbers were mixed across the four major U.S. regions, there is cause for optimism as housing inventory shows signs of growth.
Let’s take a closer look at the key highlights and what they mean for the real estate market.
Steady sales and mortgage rats
Total existing-home sales, including single-family homes, townhomes, condos, and co-ops, inched up by 0.2% from April to a seasonally adjusted annual rate of 4.30 million.
However, compared to the previous year, sales declined by 20.4%, reflecting the ongoing challenges in the market.
NAR Chief Economist, Dr. Lawrence Yun highlighted the influence of mortgage rates on home sales, emphasizing that relatively stable rates have contributed to consistent sales in recent months.
Growing housing inventory
One positive development is the increase in the inventory of unsold existing homes. May saw a 3.8% rise in inventory, reaching 1.08 million units.
This improvement equates to a 3.0-month supply at the current sales pace, up from 2.6 months in May 2022.
NAR leaders also pointed out that a temporary reduction in the capital gains tax on investment property sales could further stimulate housing inventory growth.
Prices take a slight dip
The median existing-home price for all housing types in May stood at $396,100, reflecting a 3.1% decrease compared to the previous year.
While prices rose in the Northeast and Midwest regions, the South and West experienced declines.
However, it’s worth noting that properties remained on the market for an average of 18 days in May, indicating strong demand and competitive market conditions.
Who’s buying right now?
First-time buyers accounted for 28% of sales in May, a slight decrease from the previous month but an increase from May 2022.
Additionally, cash sales represented 25% of transactions, with individual investors or second-home buyers responsible for 15% of purchases.
The Northeast region experienced a decline of 2.0% in existing-home sales, while the Midwest saw a decrease of 2.9%. The South, on the other hand, witnessed a 1.5% increase, and the West saw a 2.6% rise in sales.
Median prices varied across regions, with the Northeast showing a 2.5% increase, the Midwest a 1.1% rise, the South a 2.7% decrease, and the West a 5.7% decline.
A glimmer of hope
The marginal increase in existing-home sales brings a glimmer of hope to the real estate market, indicating some stability amid challenging conditions. The growth in housing inventory is an encouraging sign, offering the potential for more choices for buyers.
However, the market still faces supply constraints and affordability concerns. Policy measures, such as a temporary reduction in the capital gains tax, could help stimulate inventory growth and further boost the housing market.