Existing-home sales slide as prices rise

Existing-home sales decreased for a fourth straight month in May, the National Association of Realtors (NAR) reported.

Total existing-home sales, including completed transactions of single-family homes, townhomes, condos, and co-ops, dropped 0.9% from April to a seasonally-adjusted annual rate of 5.80 million in May. 

Sales in total climbed year-over-year, up 44.6% from a year ago (4.01 million in May 2020).

Single-family home sales dropped to a seasonally-adjusted annual rate of 5.08 million in May, down 1% from 5.13 million in April, and up 39.2% from one year ago. The median existing single-family home price was $356,600 in May, up 24.4% from May 2020.

The median existing-home price for all housing types in May was $350,300, up 23.6% 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, the NAR noted.

Total housing inventory at the end of May amounted to 1.23 million units, up 7% from April’s inventory and down 20.6% 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.

“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.

Properties typically remained on the market for 17 days in May, unchanged from April and down from 26 days in May 2020. About 89% of the homes sold in May 2021 were on the market for less than a month.

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

First-time buyers were responsible for 31% of sales in May, also even with April but down from 34% in May 2020. 

A new study released by NAR last week – the 2021 Vacation Home Counties Report – found that from January to April 2021, the share of vacation home sales to total existing-home sales rose to 6.7%. Vacation home sales jumped 57.2% year-over-year compared to the 20% 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.”

Here’s how existing-home sales break down by region:

• Existing-home sales in the Northeast decreased 1.4% in May, but the annual rate of 720,000 is a 46.9% jump from a year ago. The median price in the Northeast was $384,300, up 17.1% from May 2020.
• Existing-home sales in the Midwest rose 1.6% to an annual rate of 1,310,000 in May, a 27.2% increase from a year ago. The median price in the Midwest was $268,500, an 18.1% increase from May 2020.
• Existing-home sales in the South declined 0.4%, posting an annual rate of 2,590,000 in May, up 47.2% from the same time one year ago. The median price in the South was $299,400, a 22.6% jump from one year ago.
• Existing-home sales in the West fell 4.1%, recording an annual rate of 1,180,000 in May, a 61.6% climb from a year ago. The median price in the West was $505,600, up 24.3% from May 2020.