May home sales nosedive despite ‘softer’ price growth
Usually a top month for home purchases, May sales fell year-on-year, with the coronavirus effect weighing on the property market for the second month in a row, according to Remax.
Completed transactions were down 33.7% year over year and down 3.9% from April 2020. Annual sales declined by double digits in all 53 top real estate markets examined. Des Moines, Iowa, saw the smallest decrease of 14.3%, followed by 15.5% in Little Rock, Ark. And 15.6% in Richmond, Va. On the other end, the number of homes sold in Detroit fell 64.8%, while it fell from 61.4% in Pittsburgh and 57.9% in Miami, followed suit.
Stocks shortages further weighed on the matter. Housing supply fell to a low of nearly 12 years in May, falling 25% year on year and 4% month on month. Only three of the 53 metro areas recorded annual increases. Inventories rose 12.7% in Indianapolis, 4.3% in Wichita, Can., And 1% in Chicago.
Overall, the housing supply fell from 3 months in the previous year to 2.5 months and from 3.7 months in April. A delivery of 6 months defines the market equilibrium. Average market days were 46 days from April but fell from 48 in May 2019.
According to a separate data analysis by Radian, the scarce inventory was likely responsible for a spike in home values in May. According to the mortgage insurer’s property price index, prices rose by 7.8% month to month and 4.5% month to month. The median single-family home sales price rose to $ 254,826, a three-month gain of 5.5% down from 5.6% in the previous three months.
“US home price increases slowed in May, a month usually known for accelerating activity,” said Steve Gaenzler, SVP for data and analytics at Radian. “A smaller appreciation in US house prices compared to the previous month suggests that the effects of COVID on house prices at the national or local level may not be fully felt yet, but we are encouraged by some of our leading indicators.”
Many who watch the market place their hopes on a turnaround as home stay orders rise.
“We believe the spring season has been largely postponed for several weeks,” said Adam Contos, CEO of Remax, in a press release. “And since the home is the center of people’s lives this year, we’ve seen the impact of pent-up demand to a significant extent. Without another major coronavirus wave, inventory levels and unemployment could be the main drivers of how.” the real estate market is strong this year. “
One of the indicators of the housing market is the construction industry. While housing starts increased less than expected in May – and far below the previous year’s level – they have gained traction compared to the previous month.
“Housing construction increased in May, but single-family starts were almost 18% below the pace of the previous year and multi-family starts started 33%. At just 9% below last year’s level, new permits are recovering faster and are an indication that the Das Construction should continue to pick up in the coming months, “said Mike Fratantoni, chief economist for the Mortgage Bankers Association.
“MBA’s data on purchase proposals clearly shows that demand for residential property is buoyant due to record-low mortgage rates,” he said. “However, unless additional housing stock is available, that surge in demand cannot be compared to the expected robust spike in residential sales. The only positive side of the low supply is that it should continue to support current home values.”