The overall inventory of homes for sale in the U.S. rose in May; however, two reports describe a market that is still underperforming in comparison to historical norms.
According to Re/Max’s National Housing Report, the inventory of homes for sale increased by 0.4 percent in comparison to April. The average days on the market for a home stood at 64 days, only a two-day reduction when compared to May of last year.
Inventory in the 53 metros surveyed by the report are still 11.7 percent below the level of one year ago. Several metros are still reporting less than a two-month supply of inventory:
- Denver (1 month)
- San Francisco (1 month)
- Seattle (1.5 months)
- Dallas-Fort Worth (1.7 months)
- Portland, Oregon (1.7 months)
- Boston (1.8 months)
- Omaha, Nebraska (1.8 months)
- San Diego (1.9 months)
Matching Re/Max’s findings, First American’s Existing-Home Sales Capacity (EHS-C) model increased by 0.3 percent in May when compared to April. The model gauges whether existing-home sales are under capacity or over capacity based on current market fundamentals.
According to First American’s chief economist, Mark Fleming, the market continues to underperform in terms of market capacity for existing-home sales. He cited affordability and economic uncertainty as the reasons for reduced demand.
Despite trailing inventory levels, the Re/Max report found that completed transactions in May were 3.5 percent higher than in May of last year.
Last month, 38 metro areas saw higher sales on a year-over-year basis, with 11 reporting double-digit increases. Notable metros include:
- Wilmington, Delaware (18.3 percent increase)
- Des Moines, Iowa (16.8 percent increase)
- Nashville (15 percent increase)
- Baltimore (12.9 percent increase)
- Albuquerque, New Mexico (12.2 percent increase)
- Tampa, Florida (11.8 percent increase)
It’s worth noting that none of these markets saw double-digit rises in median sales prices spanning May 2014 to May 2015. This indicates that transaction volume is up primarily in more affordable markets.
Overall, the median sales price of a home sold in May stood at nearly $213,000, a 7.8 percent increase when compared to May 2014.
Among the 53 metro areas surveyed, 50 reported higher prices than one year ago, with 12 rising by double digits, including:
- Denver (16.6 percent)
- Detroit (15.4 percent)
- San Francisco (13 percent)
- Dallas-Fort Worth (12.8 percent)
- Birmingham, Alabama (11.9 percent)
- Milwaukee (11.9 percent)
“True market values are beginning to meet or exceed the expectations that homeowners have for the value of their properties,” Fleming noted.