Existing-home sales have dipped for a fourth consecutive month, by 0.9% between April and May. Slowly declining sales is a trend experts attribute to low supply—which they say could improve in the coming months—and unaffordability. The National Association of Realtors (NAR) reports that the median home prices nationwide saw a record year-over-year increase of 23.6% in May to $350,300. On average during the month, properties sold at 17 days on the market.
"Home sales fell moderately in May and are now approaching pre-pandemic activity," said Lawrence Yun, NAR's Chief Economist. "Lack of inventory continues to be the overwhelming factor holding back home sales, but falling affordability is simply squeezing some first-time buyers out of the market."
Yun added that the outlook is "encouraging," and that he expects the inventory situation to improve, which, he adds, "will give buyers more options and help tamp down record-high asking prices for existing homes."
A closer look at the housing inventory—single-family, condominiums, and co-ops, showed a total of 1.23 million units, up 7.0% from April's inventory and down 20.6% from one year ago (1.55 million). Unsold inventory sits at a 2.5-month supply at the present sales pace, marginally up from April's 2.4-month supply but down from 4.6-months in May 2020, according to NAR's monthly report.
Typical time on the market for for-same existing homes was equal to what it was in April, but units are selling quicker than they were at this time last year (17 days now compared to 26 then).
During May, 31% of sales were to first-time buyers, which also is even with April but down from 34% in May 2020.
Vacation/second-home buyers and individual investors, who account for many a cash sale, bought 17% of houses in May, which is in line with the previous month but up from 14% a year ago. Cash sales made up 23% of transactions in May, down from 25% in April and up from 17% in May 2020. NAR points to its vacation-home study, which showed that from January to April 2021, the share of vacation home sales to total existing-home sales rose to 6.7%. Vacation home sales jumped 57.2% year-over-year compared to the 20% year-over-year growth in total existing-home sales, the association reported.
"The appeal of vacation homes has certainly grown during the pandemic, especially among employees permitted to work from home," Yun said. "As businesses decide new guidelines for remote workers, even allowing permanent remote options in some cases, look for vacation homes to remain a popular option."
NAR's report adds that foreclosures and short sales in May were minuscule, with distressed sales garnering a less than 1% share of home sales. That is unchanged from the previous month, and it is due to foreclosure moratoria, which, at least at the federal level, will end this summer. A year prior, distressed sales marked about 3% of existing-home sales.
Regionally, only one major section of America recorded a month-over-month increase—the Midwest. The other three—Northeast, South, West—regions saw sales decline. However, each of the four areas again registered double-digit year-over-year gains.
The full report is available at NAR.realtor.