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For the first time in two months, existing-home sales saw an increase. May's home sales climbed 2.5% from a month earlier to reach 5.34 million. When compared to a year earlier, sales were slightly down by 1.1%. According to the National Association of Realtors (NAR), every region across the country experienced growth in sales, with the Northeast taking the lead. Favorable market conditions were responsible for the increase, according to Lawrence Yun, chief economist for NAR: "The purchasing power to buy a home has been bolstered by falling mortgage rates, and buyers are responding."
Inventory Near Historic Lows
By the end of May, there were 1.92 million homes available for sale. In comparison, the housing stock consisted of just 1.83 million homes a month ago and 1.87 million homes a year ago. At the current sales pace, unsold inventory could supply the market for 4.3 months, up from 4.2 months both a month and a year ago. Despite the increase in inventory, total housing stock levels remained near historic lows. In addition, properties sold quickly; the average property remained available for sale for only 26 days in May, unchanged from a year ago but up from 24 days in April. Of all the homes sold in May, 53% were sold in under a month. Given the quick sale time and low inventory levels, there are calls to increase new construction. "Otherwise, we risk worsening the housing shortage, and an increasing number of middle-class families will be unable to achieve homeownership," says Yun.
First-Time Buyers Not Afraid of High Prices
The lack of inventory had an impact on home prices. According to Yun, "Solid demand along with inadequate inventory of affordable homes have pushed the median home price to a new record high." The median existing-home price climbed 4.8 percent from a year ago to $277,700. This was the 87th month in a row of year-over-year price increases. Yet despite the high prices, first-time buyers still found a way to enter the housing market. First-time buyers accounted for 32% of all sales in May, unchanged from last month and up 31% from last year. According to the NAR 2018 Profile of Home Buyers and Sellers, first-time buyers made up 33% of the market in 2018.
Regional Sales Breakdown
Northeast - Existing-home sales annual rate of 670,000; an increase of 4.7% from April 2019, and unchanged from May 2018. The median price of $304,100 is an increase of 6.6% from May 2018.
Midwest - Existing-home sales annual rate of 1.22 million; an increase of 3.4% from April 2019, and a decrease of 3.9% from May 2018. This median price of $220,500 is an increase of 5.6% from May 2018.
South - Existing-home sales annual rate of 2.32 million; an increase of 3.4% from April 2019, but a decrease of 3.9% from May 2018. The median price of $241,400 is an increase of 3.6% from May 2018.
West - Existing-home sales annual rate of 1.13 million; an increase of 1.8% from April 2019, but a decrease of 3.4% from May 2018. The median price of $409,100 is an increase of 4.1% from May 2018.
