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Housing market conditions are challenging for buyers in many parts of the country; sellers, meanwhile, are finding the market favorable. Inventory levels are low and sales prices are high. In some markets, multiple offers have become prevalent. And in a blow to first-time buyers everywhere, fewer affordable homes are coming onto the market. Despite all this, existing-home sales climbed in the month of May; every region except the Midwest posted month-over-month and year-over-year sales increases.
1. Low Inventory
Some buyers are finding themselves standing on the sidelines of the housing market. According to Lawrence Yun, chief economist for the National Association of Realtors (NAR), "Current demand levels indicate sales should be stronger, but it's clear some would-be buyers are having to delay or postpone their home search because low supply is leading to worsening affordability conditions." In May, 1.96 million existing homes were available for sale, an inventory increase of 2.1 percent from a month earlier. However, for the past 24 months, inventory has fallen year over year, and May was no exception: inventory was 8.4 percent lower than last year. At the current sales pace, the current housing stock could last only 4.2 months, down from 4.7 months a year ago.
2. Selling Quickly
Due to the inventory shortages, homes are not sitting on the market for long. In May, the time it took for a home to go from listed to sold was on average 27 days. This is the shortest time frame recorded since NAR began tracking the number of days on the market in May 2011. In comparison, homes stayed on the market for 29 days in April and 32 days in May 2016. Of all the homes sold in May, 55 percent were on the market for less than 30 days, another all-time-high record. Non-distressed homes sold the fastest, taking a median of 27 days to sell. Foreclosures and short sales were less popular, staying on the market for a median of 48 and 94 days, respectively.
3. Prices Up
With high demand and low inventory, home prices climbed to a record-breaking high. In May, the median existing-home price reached $252,800, a 5.8 percent increase from a year ago. This is the highest recorded median sales price, overtaking June 2016's peak of $247,600. What's more, this is the 63rd month in a row of year-over-year sales gains. According to Yun, "Home prices keep chugging along at a pace that is not sustainable in the long run." Unless the market sees an increase in the number of listings in the affordable price range, housing affordability may be affected.
Regional Home Sales
Northeast - Existing-home sales annual rate of 780,000; an increase of 6.8 percent from April and 2.6 percent from May 2016.
Midwest - Existing-home sales annual rate of 1.28 million; a decrease of 5.9 percent from April and 0.8 percent from May 2016.
South - Existing-home sales annual rate of 2.34 million; an increase of 2.2 percent from April and 4.5 percent from May 2016.
West - Existing-home sales annual rate of 1.22 million; an increase of 3.4 percent both month over month and year over year.
