Home sales in the United States are at their highest level since 2009 and are set to remain high as the number of new properties coming on the market is limited, according to real estate agents. The latest data from the National Association of Realtors shows that completed transactions of existing homes rose 4.2% to a seasonally adjusted annual rate of 5.18 million last month which is 12.9% above a year ago.
Prices have been growing steadily with data showing that the national media existing home price for all housing types was $208,000 in May, up 15.4% from the same month last year, and the sixth straight month of double digit price growth. It is also the strongest price gain since October 2005, when a 16.6% jump was recorded from a year earlier. The last time there were 15 consecutive months of year on year price increases was from March 2005 to May 2006.
NAR chief economist Lawrence Yun believes that the real estate recovery is strengthening and he does not expect the housing supplies to increase this year. ‘The housing numbers are overwhelmingly positive. However, the number of available homes is unlikely to grow, despite a nice gain in May, unless new home construction ramps up quickly by an additional 50%,’ he explained. ‘The home price growth is too fast, and only additional supply from new home building can moderate future price growth,’ he added.
Total housing inventory at the end of May rose 3.3% to 2.22 million existing homes available for sale, which represents a 5.1 month supply at the current sales pace, down from 5.2 months in April. Listed inventory is 10.1% below a year ago, when there was a 6.5 month supply. Market conditions today are vastly different than during the housing boom, according to NAR president Gary Thomas. ‘The boom period was marked by easy credit and overbuilding, but today we have tight mortgage credit and widespread shortages of homes for sale,’ he pointed out.
Quote from PropertyCommunity.com : “Residential real estate values in cities in the United States increased by 5.4% year on year last month, the second highest annual rate of national appreciation registered in the past 12 months.”
‘The issue now is pent up demand and strong growth in the number of households, with buyer traffic 29% above a year ago, coinciding with several years of inadequate housing construction. These conditions are contributing to sustainable price growth,’ he added.
The time it takes to sell a property is falling. The median time on market for all homes was 41 days in May, down from 46 days in April, and is 43% faster than the 72 days on market in May 2012. The NAR data shows that 45% of all homes sold in May were on the market for less than a month. The median time on the market is the shortest since monthly tracking began in May 2011. On an annual basis, a separate NAR survey of home buyers and sellers shows the shortest selling time was four weeks in both 2004 and 2005.
There is regional variation in both sales and prices. Existing home sales in the Northeast increased by 1.6% in May and are 8.3% above a year ago. The median price in the Northeast was $269,600, up 12.3% from a year ago. Existing home sales in the Midwest jumped 8% in May and are 16.3% higher than a year ago. The median price in the Midwest was $159,800, up 8.2% from May 2012. In the South, existing home sales rose 4% in May and are 16.1% above May 2012. The median price in the South was $183,300, which is 15% above a year ago. Existing home sales in the West increased 2.5% in May and are 7% above a year ago. With the tightest regional supply, the median price in the West was $276,400, up 19.9% from May 2012.