Existing home sales fell by 9.7% on a month-over-month basis in May, down to a seasonally adjusted annual rate of 3.91 million. This marks a three-month decline in sales since the start of the COVID-19 outbreak in the U.S., according to the National Association of Realtors’ Existing Home Sales data release.
In all, sales of existing single-family homes and condo/co-op units have fallen 26.6% year over year, down from a seasonally adjusted annualized rate of 5.33 million in May 2019. Each of the four major regions experienced a dip in month-over-month and year-over-year sales alike, with the Northeast experiencing the steepest MOM drop.
“Sales completed in May reflect contract signings in March and April—during the strictest times of the pandemic lockdown and hence the cyclical low point,” says Lawrence Yun, chief economist at NAR. “Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year.”
Housing inventory totaled 1.55 million units at the end of May, up 6.2% from April’s inventory and down 18.8% from one year ago. At the current sales pace, unsold inventory sits at a 4.8-month supply. The median existing home price rose 2.3% YOY to $284,600, marking the 99th consecutive month of year-over-year price gains.
“New-home construction needs to robustly ramp up in order to meet rising housing demand,” Yun adds. “Otherwise, home prices will rise too fast and hinder first-time buyers, even at a time of record-low mortgage rates.”
First-time buyers were responsible for 34% of existing home sales in May, down from 36% in April and up from 32% in May 2019. All-cash sales accounted for 17% of transactions in May, and distressed sales represented 3% of sales.
“Although the real estate industry faced some very challenging circumstances over the last several months, we’re seeing signs of improvement and growth, and I’m hopeful the worst is behind us,” says NAR President Vince Malta. “NAR, along with our partners and 1.4 million members, are already working to reignite America’s real estate industry, which will be a key driver in our nation’s economic recovery.”
Existing home sales fell by 13% in the Northeast to an annual rate of 470,000, down 29.9% from one year ago. In the Midwest, sales fell 10% to an annual rate of 990,000, down 20.2% from one year ago. In the South, existing home sales fell 8% to an annual rate of 1.73 million, down 25.1% from one year ago. And existing home sales in the West fell 11.1% to an annual rate of 720,000, down 32.1% from one year ago.
