Markets & EconomyNews Brief

A month in review: The May housing market

NAR released its first 'Housing Minute' video as part of a monthly series
  • Here's a recap of pending home sales, existing home sales, price indices and studies from NAR, S&P Dow Jones, Zillow and Trulia.

Every month, economists release a number of indices, reports and analyses of the housing market, and it can be difficult to keep up with them all.

Thankfully, the National Association of Realtors (NAR) recapped the month in its new Housing Minute monthly video series.

Seventy-one percent of homeowners believe now is a good time to sell.

  • The National Association of Realtors released its Q2 Homeownership Opportunities and Market Experience (HOME) Survey, where 71 percent of homeowners said they felt it was a “good time” to sell — the only caveat is that those sellers aren’t actually selling their homes. Furthermore, the renters who would be buying those new listings aren’t feeling too confident about their ability to buy.
  • Again, the only solution to help sellers sell and buyers buy is more for-sale inventory. “I believe there is one answer to both of your questions: more inventory,” said NAR Chief Economist Lawrence Yun in an emailed statement. “More new homes for sale would increase the pool of listings homeowners would have to choose from if they decided to sell their home. Many right now are staying put because they will likely sell their home a lot quicker than it will take to find another home to buy because of tight supply.”

May sales are up 1.1 percent month-over-month and 2.7 percent year-over-year, and May sales prices rose 5.8 percent year-over-year to a new peak median of $252,800.

  • May existing home sales rose after a “notable decline” in April. Yun noted the rise was due to consumer resilience in the face of hostile housing market conditions.
  • The 5.8 percent year-over-year increase in home prices is part of a 63-month trend of rising home prices.
  • S&P/Case-Schiller released its April numbers with a fifth consecutive all time high in home prices. In the report, S&P Dow Jones Indices managing director and chairman of the index committee David M. Blitzer said “there’s nothing right now to keep prices from going up,” but warned a slow down will eventually come.
  • “The question is not if home prices can climb without any limit; they can’t,” Blitzer said. “Rather, will home price gains gently slow or will they crash and take the economy down with them? For the moment, conditions appear favorable for avoiding a crash.”

There were 1.96 million active listings — an 8.4 percent drop from May 2016, and homes were on the market an average of 27 days. 

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  • New supply isn’t keeping up with demand, which means when new listings hit the MLS, buyers are snapping them up ASAP. According to Trulia Chief Economist Ralph McLaughlin, this is especially impacting first-time buyers who aren’t equipped to handle the boom in home prices.
  • First-time buyers looking for a starter home will have to spend 3.1 percent more of their income to afford a median priced $169,129 property.
  • Zillow released a study that revealed homes are selling an average of eight days faster, and that isn’t expected to slow down any time soon.
  • California markets are feeling the pinch the most with homes staying on the market, on average, for 20 to 25 days.

Signed contracts dipped for the third consecutive month, taking a 0.8 percent month-over-month and 1.7 percent year-over-year hit. 

  • May’s pending home sales were part of a three-month decline, thanks to inventory shortages. Yun says “buyer interest” is there, but there’s simply not enough supply to meet the demand. The West Coast was hit hardest with a 4.5 percent year-over-year decline in contract signings.

Email Marian McPherson.