As the summer weather warms, so is the housing market. May 2014 existing home sales rose 4.9 percent from April to a seasonally adjusted annualized rate (SAAR) of 4.89 million sales according to the National Association of Realtors®. With April’s 4.66 million sales on a SAAR basis (revised upwards), that made the largest sequential monthly gain since August 2011 which increased 5 percent. Compared to May 2013, however, the May 2014 sales rate was off 5.0 percent.
The latest monthly median price of $213,400 was up 5.1 percent year-over-year.
On a 12-month moving average basis (which I believe gives better trends as it removes the month-to-month noise in the data), sales are up 1.9 percent with median price gaining 9.7 percent.
The following graph shows the raw unadjusted (but revised) data for sales and median price. The next graph is the 12-month moving average, and the third simply shows the two series on a limited basis.
Other metrics in the housing sales release included:
- First-time homebuyers tallied just 27 percent of all sales, versus a former 40 percent normal level in the past decade. A year ago the entry level market represented 29 percent of all buyers.
- Investors made up 16 percent of May sales, down from 18 percent in April. Cash was the form of settlement 68 percent of the time for this group.
- All-cash transactions were made 32 percent of the time in May.
- Distressed sales totaled just 11 percent of all May transactions versus 18 percent a year ago. Just 3 percent were short sales with 8 percent foreclosures. Short sales were sold at an average discount of 11 percent when compared to non-distressed properties and foreclosures 18 percent.
- Median days on market was 47, with short sales taking 125 days, foreclosures 57, and non-distressed properties 44 days. Four-out-of ten May sales (41 percent) were on the market less than one month.
Since Congress failed to renew the debt forgiveness on income tax associated with short sales, expect those to continue to decline.
To read the entire NAR press release click http://www.realtor.org/news-releases/2014/06/existing-home-sales-heat-up-in-may-inventory-levels-continue-to-improve
My expectations are for an ongoing improving housing market as job growth gains traction. I stick with my original forecast that median home prices will rise from 5 to 7 percent in 2014. While I remain unchanged with the 4 to 6 percent increase in home sales, that becomes a more challenging number to hit. Time will tell.
Housing, however, is finally blooming just like the flowers across the country.
Ted