If the US housing market appears pricey and tight, that’s because it is.
With housing inventory limited and sales pace accelerated, US existing-home sales surged ahead in May to a 9-year high, while average prices soared to a new peak.
This all happened while sales of new homes dropped 6%.
EHS were up 4.5% over last May (and 1.8% over April 2016) to a seasonally-adjusted annual rate of 5.53M units. This is the highest SAAR since February 2007, and the highest average price per unit since the figure has been measured.
NAR chief economist Lawrence Yun expects the housing market to maintain this pace, unless job growth in the US continues to decelerate.
“This spring’s sustained period of ultra-low mortgage rates has certainly been a worthy incentive to buy a home, but the primary driver in the increase in sales is more homeowners realizing the equity they’ve accumulated in recent years and finally deciding to trade-up or downsize. With first-time buyers still struggling to enter the market, repeat buyers using the proceeds from the sale of their previous home as their down payment are making up the bulk of home purchases right now … Barring further deceleration in job growth that could ultimately temper demand from these repeat buyers, sales have the potential to mostly maintain their current pace through the summer.”
Some quick facts about the US Housing Market for May 2016:
- SAAR: 5.53M units (+4.5% year-over-year)
- Median Pricing: $239,700 (+4.7% year-over-year)
- 51st straight month of year-over-year price advance
- Inventory: 4.7 months (DOWN 5.7% from May 2015)
- 49% of EHS transactions were on the market <1 month (highest-ever)
- First-time buyers: 30% (Down 2 pts. year-over-year)
For more information on the US Housing Marketing visit Realtor.org.
Dave Eckstein is a Partner in the firm ESA & Company. He specializes in highly profitable market share growth for local businesses and gets a kick out of demonstrating a declining cost of customer acquisition. He plays baseball, but isn't that Dave Eckstein.