Sales of existing homes showed another gain in May according statistics released this week by the National Association of Realtors.® May’s increase was the first back-to-back monthly gain since September 2005. This is a national number and Flagstaff, so far, is lagging the national recovery. For Flagstaff home sales statistics for May, read my monthly report by clicking here.
Nationally, existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.4 percent to a seasonally adjusted annual rate of 4.77 million units in May from a downwardly revised level of 4.66 million units in April. Sales remained 3.6 percent below the 4.95 million-unit pace in May 2008.
Lawrence Yun, NAR chief economist, explained the improvement in sales: “Historically low mortgage interest rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates,” Yun says. “First-time buyers also are being drawn off the sidelines by the $8,000 tax credit, which is helping to absorb inventory.
However, the increase in sales is less than anticipated based upon the Realtors® Pending-Home-Sales Index because transactions are stalling in escrow. Yun blamed “faulty” appraisals for preventing buyers from getting loans. In Flagstaff, we have certainly had lengthy, and sometimes failed, transactions because of the difficulties of appraising property when there are so few sales for appraisers to compare contracts to. Underwriters and mortgage insurers are taking a very cautious approach to lending, even when an appraisal matches the purchase price. Several successful Flagstaff transactions have had to switch from conventional lending to government-guaranteed FHA loans because of the cautious private lenders.
An NAR practitioner survey in May showed first-time buyers accounted for 29 percent of transactions, and that the number of buyers looking at homes is nearly 10 percentage points higher than a year ago. First-time homebuyers have been spurred by the up to $8000 tax credit available to them this year for homes that close prior to December 1. This, in turn, is beginning to spur repeat buyers as they are able to sell their homes and step-up. Yun said, however, that “investors appear less active, but are more prevalent in areas with large price corrections.”
National median existing-home price: for all housing types was $173,000 in May, down 16.8 percent from a year earlier. The market share for distressed properties declined to 33 percent of all sales in May from 45 percent in April. Single-family home sales: rose 1.9 percent to a seasonally adjusted annual rate of 4.25 million in May from a pace of 4.17 million in April, but are 3 percent below the 4.38 million-unit level in May 2008. The median existing single-family home price was $172,900 in May, down 16.1 percent from a year ago. Existing condominium and co-op sales: increased 6.1 percent to a seasonally adjusted annual rate of 520,000 units in May from 490,000 in April, but are 8.9 percent below the 571,000-unit level in May 2008. The median existing condo price was $173,800 in May, down 21.9 percent from a year earlier.
Regionally, here’s how housing fared across the country for existing-home sales:
- Northeast: rose 3.9 percent to an annual level of 800,000 in May, but are 10.1 percent below a year ago. Median price: $243,600, which is 12.5 percent below May 2008.
- Midwest: jumped 9 percent in May to a pace of 1.09 million but are 4.4 percent below May 2008. Median price: $145,800, which is 10.4 percent lower than a year ago.
- South: unchanged at an annual pace of 1.74 million in May but are 8.9 percent below a year ago. Median price: $157,400, down 9.9 percent from May 2008.
- West: slipped 0.9 percent to an annual rate of 1.14 million in May, but are 11.8 percent higher than May 2008. Median price: $197,700, down 30.6 percent from a year ago.
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