Existing-home sales decreased for a fourth straight month in May, according to the National Association of Realtors (NAR). Only one major U.S. region recorded a month-over-month increase, while the other three regions saw sales decline. However, each of the four areas again registered double-digit year-over-year gains.
Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, dropped 0.9 percent from April to a seasonally-adjusted annual rate of 5.80 million in May. Sales in total climbed year-over-year, up 44.6 percent from a year ago (4.01 million in May 2020).
“Home sales fell moderately in May and are now approaching pre-pandemic activity,” said Lawrence Yun, NAR’s chief economist. “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.”
The median existing-home price for all housing types in May was $350,300, up 23.6 percent from May 2020 ($283,500), as every region registered price increases. This is a record high and marks 111 straight months of year-over-year gains since March 2012.
Total housing inventory at the end of May amounted to 1.23 million units, up 7.0 percent from April’s inventory and down 20.6 percent from one year ago (1.55 million). Unsold inventory sits at a 2.5-month supply at the present sales pace, marginally up from April’s 2.4-month supply but down from 4.6-months in May 2020.
Properties typically remained on the market for 17 days in May, unchanged from April and down from 26 days in May 2020. Eighty-nine percent of the homes sold in May 2021 were on the market for less than a month.
First-time buyers were responsible for 31 percent of sales in May, also even with April but down from 34 percent in May 2020. NAR’s 2020 Profile of Home Buyers and Sellers – released in late 2020 – revealed that the annual share of first-time buyers was 31 percent.
Individual investors or second-home buyers, who account for many cash sales, purchased 17 percent of homes in May, even with April and up from 14 percent in May 2020. All-cash sales accounted for 23 percent of transactions in May, down from 25 percent in April and up from 17 percent in May 2020.
A new study released by NAR last week found that from January to April 2021, the share of vacation home sales to total existing-home sales rose to 6.7 percent. Vacation home sales jumped 57.2 percent year-over-year compared to the 20 percent year-over-year growth in total existing-home sales.
“The appeal of vacation homes has certainly grown during the pandemic, especially among employees permitted to work from home,” Yun said. “As businesses decide new guidelines for remote workers, even allowing permanent remote options in some cases, look for vacation homes to remain a popular option.”
Single-family and Condo/Co-op Sales
Single-family home sales dropped to a seasonally-adjusted annual rate of 5.08 million in May, down 1.0 percent from 5.13 million in April, and up 39.2 percent from one year ago. The median existing single-family home price was $356,600 in May, up 24.4 percent from May 2020.
Existing condominium and co-op sales were recorded at a seasonally-adjusted annual rate of 720,000 units in May, unchanged from April but up 100.0 percent from one year ago. The median existing condo price was $306,000 in May, an annual increase of 21.5 percent.
“As outlined in last week’s NAR/Rosen Consulting Group report, we continue to face a dire shortage of available housing in this country,” said NAR President Charlie Oppler, a Realtor from Franklin Lakes, New Jersey, and the CEO of Prominent Properties Sotheby’s International Realty. “NAR continues its advocacy efforts to find new, creative and effective ways to increase housing construction and supply.
“The right policies will provide huge benefits to our nation’s economy, and our work to close this gap will be particularly impactful for lower-income households, households of color and first-time buyers.”
For the second straight month, only the Midwest experienced higher sales from the prior month.
Existing-home sales in the Northeast decreased 1.4 percent in May, but the annual rate of 720,000 is a 46.9 percent jump from a year ago. The median price in the Northeast was $384,300, up 17.1 percent from May 2020.
Existing-home sales in the Midwest rose 1.6 percent to an annual rate of 1,310,000 in May, a 27.2 percent increase from a year ago. The median price in the Midwest was $268,500, an 18.1 percent increase from May 2020.
Existing-home sales in the South declined 0.4 percent, posting an annual rate of 2,590,000 in May, up 47.2 percent from the same time one year ago. The median price in the South was $299,400, a 22.6 percent jump from one year ago.
Existing-home sales in the West fell 4.1 percent, recording an annual rate of 1,180,000 in May, a 61.6 percent climb from a year ago. The median price in the West was $505,600, up 24.3 percent from May 2020.