The price of everyday items like fuel are hampering the real estate market recovery in the United States and agents also fear that government initiatives will harm what they claim are signs of recovery.
As the latest figures from the National Association of Realtors shows that sales are down its chief economist said that he is hopeful that it is temporary factors that are weighing down on the market.
‘Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May,’ said Lawrence Yun.
‘Current housing market activity indicates a very slow pace of broader economic activity, but recent reversals in oil prices are likely to mitigate the impact going forward. The pace of sales activity in the second half of the year is expected to be stronger than the first half, and will be much stronger than the second half of last year,’ he added.
Yun said the market also is being constrained by the lending community. ‘Even with recent economic softness, this is a disappointing performance with home sales being held back by overly restrictive loan underwriting standards. ‘There’s been a pendulum swing from very loose standards which led to the housing boom to unnecessarily restrictive practices as an overreaction to the housing correction. This overreaction is clearly holding back the recovery,’ he explained.
Ron Phipps, NAR president warned a number of proposals being considered in Washington could further jeopardize the housing recovery. ‘We’re concerned about the flow of available capital, including a possible rule that would effectively raise minimum down payment requirements to 20%,’ he said.
‘Increasing down payment requirements would effectively shut many qualified families out of the market. What we critically need is a return to the basics of providing safe mortgages to creditworthy buyers willing to stay well within their budget,’ he added.
The latest NAR figures shows that existing home sales, that is completed transactions that include single family, town homes, condominiums and co-ops, fell 3.8% to a seasonally adjusted annual rate of 4.81 million in May from a downwardly revised 5.00 million in April.
Sales are now 15.3% below a 5.68 million pace in May 2010 when sales were surging to beat the deadline for the homebuyer tax credit.
The national median existing home price for all housing types was $166,500 in May, down 4.6% from May 2010. Distressed homes, typically sold at a discount of about 20%, accounted for 31% of sales in May, down from 37% in April and the same as in May 2010.
The figures also show that total housing inventory at the end of May fell 1% to 3.72 million existing homes available for sale, which represents a 9.3 month supply at the current sales pace.
The number of first time buyers remains steady at 35% of homes in May, down from 36% in April but well below the 46% of May 2010 when the tax credit was in place. The number of investors has increased, some 19% in compared with 14% a year ago.
Regionally, existing home sales in the Northeast fell by 2.5% and are 13.5% below May 2010. However, median prices reached $241,500, up 6.1% from a year ago.
Existing home sales in the Midwest fell 6.4% in May and are now 22.7% below a year ago. Prices have not recovered in this region. The median price was $136,400, some 8.5% below May 2010.
In the South, existing home sales fell 5.1% and are 14.4% below May 2010. The median price was $149,200, down 3.1% from a year ago. While in the West prices were unchanged but are 10% lower than a year ago. The median price in the West was $192,300, which is 12.6% below May 2010.