Existing-Home Sales Constrained by Tight Supply in May
Limited supplies of housing inventory held back existing-home sales in May, but sales maintained a strong lead over year-ago levels and home prices are on a sustained uptrend in all regions, according to the National Association of Realtors.
Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 1.5 % to a seasonally adjusted annual rate of 4.55 million in May from 4.62 million in April, but are 9.6 % above the 4.15 million-unit pace in May 2011. Lawrence Yun, NAR chief economist, said inventory shortages in certain areas have been building all year. "The slight pullback in monthly home sales is more likely due to supply constraints, rather than softening demand. The normal seasonal upturn in inventory did not occur this spring," he said. "Even with the monthly decline, home sales have moved markedly higher with 11 consecutive months of gains over the same month a year earlier."
Total housing inventory at the end of May slipped 0.4 % to 2.49 million existing homes available for sale, which represents a 6.6-month supply2 at the current sales pace; there was a 6.5-month supply in April. Listed inventory is 20.4 % below a year ago when there was a 9.1-month supply. Unsold inventory has trended down from a record 4.04 million in July 2007; supplies reached a cyclical peak of 12.1 months in July 2010.
"The recovery is occurring despite excessively tight credit conditions and higher down-payment requirements, which are negating the impact of record high affordability conditions," Yun said.Â According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage declined to a record low 3.80 % in May from 3.91 % in April; the rate was 4.64 percent in May 2011.