Realtor.com’s May Monthly Housing Trends report forecasts that the U.S. housing market has “likely” reached its low point, with signs of recovery and even strengthening emerging in April and May. Growth is expected to continue over the summer.
According to the data, the national median list price hit a new all-time high of $330,000 in May, while also rising just 1.6% annually. May’s growth exceeded April's 0.6% year-over-year increase, which was the slowest rate of growth in three years.
The average list price began May up 1.4% and rose during the month—growing 3.1% during the last week of May. New listings were down 29.1% for the week ending May 9 but recovered to being down just 22.9% by the week of May 30.
The rate of decline in newly listed properties has improved from a drop of 44.1% year-over-year in April to down 29.4% in May. Despite these positive trends, COVID-related challenges linger; homes were on the market 15 days longer than this time last year.
“May’s home price data demonstrate the underlying strength of the U.S. housing market despite the challenges brought by the COVID-19 pandemic,” said realtor.com Chief Economist Danielle Hale. “The fact that home prices are at all-time high shows that the momentum the market had prior to the pandemic has helped to keep buyer and seller expectations stable. Ongoing inventory shortages, that continue to worsen, also push home prices higher even while homes sell more slowly.”
Hale added: “As a sense of normalcy returns, we expect to see a shortened, but strong summer home-selling season, as long as seller confidence continues to improve and more homes are listed for sale.”
Thirty-five of the nation’s top 50 metros reported an increase in the median annual list price, which is up from 30 metros in April.
Los Angeles-Long Beach-Anaheim (plus-14.9%); Pittsburgh (plus-14.0%); and Cincinnati, Ohio-Kentucky-Indiana (plus-12.1%) posted the highest year-over-year median list price growth in May. The biggest declines were seen in Detroit-Warren-Dearborn (-3.4%); San Antonio-New Braunfels, Texas (-3.2%); and Seattle-Tacoma-Bellevue (-3.1%).
Along with home prices, Freddie Mac reported the average rate for a 30-year fixed-rate mortgage rose slightly to 3.18% from the prior week’s 3.15%.
“While the economy is slowly rebounding, all signs continue to point to a solid recovery in home sales activity heading into the summer as prospective buyers jump back into the market. Low mortgage rates are a key factor in this recovery,” said Sam Khater, Freddie Mac’s Chief Economist. “While homebuyer demand is up and has been broad-based across most geographies, supply has been slower to improve. In fact, the gap between supply and demand has widened even further than the large gap that existed prior to the pandemic.”