Published: Sat, June 24, 2017
Global | By Maureen Mccoy

Home sales rose in May but buyers face sharply rising prices

Home sales rose in May but buyers face sharply rising prices

Existing home sales in the United States rebounded in May following a notable decline in the previous month while median prices reached a new high, the latest index shows.

The Midwest was the only region in May that was negative, down 5.9% on the month and 0.8% on the year at 1.280 million.

Sales of previously owned homes rose just 1.1% in May to a seasonally-adjusted annual rate of 5.62 million.

Distressed sales were 5% of the total in May, which are down from 6% a year ago.

NAR chief economist Lawrence Yun said that sales activity expanded last month as more buyers overcame the increasingly challenging market conditions in many areas. Mortgage rates also remain favorable by historical standards. Last month saw 3,406 total units of homes sold, compared to 3,095 in May 2016. In May, sellers of existing single-family homes received 96.4 percent (median percentage) of their original listing price, while those selling townhouse-condo properties received 94.7 percent - a signal that the listed price is extremely close to market value. Inventory has declined on a year-over-year basis for 24 straight months.

"Home prices keep chugging along at a pace that is not sustainable in the long run", says Yun.

Properties typically stayed on the market for 27 days in May, which is down from 29 days in April and 32 days a year ago; this is the shortest timeframe since NAR began tracking in May 2011. The headline surprised to the upside with markets expecting another modest pullback on the month. On the month, volume rose 23 percent (from $3.544 billion).

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Of the 69 percent of realtors who said they completed a CRE transaction a year ago, 20 percent reported closing a deal for an global client.

USA existing home sales were up in sequential basis in May, coming in more than consensus expectations.

Homes sold for a median $239,000, up 7 percent, while condos traded 8.1 percent higher, at $178,000.

U.S. bond yields have moved lower over the past few weeks with 10-year rates at 7-month lows which should help underpin demand.

A preliminary estimate of 5.57m new home sales for April was revised lower to 5.56m. The median price in the Northeast was $281,300, which is 4.7 percent above May 2016. Typical of seasonal trends, May median price rose from April's $277,838 (2.6 percent). Median price was $170,875 vs. $165,000 a year earlier. Sales were up, however, 2.7% from May 2016.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 4.01 percent in May 2017; it averaged 3.60 percent during the same month a year earlier.

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