Existing Home Prices Hit Another Record High in May

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Key Highlights

  • Median existing home prices jumped another +23.6% y/y in May
  • At $350,300, median existing home prices continued to generate monthly price gains
  • Meanwhile, existing home sales dropped

Median Existing Home Prices Continue Climbing Higher & Higher in May

In its latest report on median existing home prices and sales volume, the National Association of REALTORS® (NAR) indicated that median prices across all existing housing types hit yet another record high of $350,300 in May 2021.

This march to higher and higher median existing home prices y/y in all regions of the country has persisted for 111 consecutive months.

The median existing single-family home price jumped +24.4% y/y to $356,600 in May.

The median existing condo price increased +21.5% to $306,000.

Existing Home Sales Dropped Slightly in May

NAR indicated in this latest report on existing home prices and sales that existing home sales fell for the fourth consecutive month in May.  Existing home sales dropped just slightly by -0.9% BUT remained up +44.6% y/y.

Why the sales slippage?  Continuing price increases are contributing to a slowdown in the pace of home sales.  Lack of affordability is the issue plus there simply aren’t enough homes on the market to meet demand.

Single-family home sales dropped -1% m/m in May however that rate still overshadowed May’s single-family home price by +24.4% y/y.

Existing condominium and co-op sales remained flat with April’s sales numbers.

Lawrence Yun, NAR’s Chief Economist, said, “Home sales fell moderately in May and are now approaching pre-pandemic activity.  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.”

Another indicator that buyers are opting out of the market due to affordability is that mortgage purchase applications are seesawing. Mortgage purchase applications dropped -17% y/y in the week ending June 11, according to the Mortgage Bankers Association, and then recovered the following week.

Market Trajectory “Encouraging”

Despite continued inventory shortages, Yun said he was “optimistic” about the market’s trajectory.  “The market’s outlook…is encouraging.  Supply is expected to improve, which will give buyers more options and help tamp down record high asking prices for existing homes.”

Inventory Improving?

May’s total inventory hit 1.23M units by the end of May.  These 1.23M housing units represent an increase of +7% from April.  These 1.23M units also represent a 2.5-month supply, up from 2.4-month supply at the end of April.

Demographics of Sale

First-time homebuyers represented 31% of May sales.

Investors, or second-home buyers, represented 17% of home sales.

Regional breakdowns of sales and prices included:

  • Midwest – sales rose +1.6% m/m, up +27.2% y/y with a median price of $268,500, an increase of +18.1% y/y
  • Northeast – existing home sales fell -1.4% y/y though still up +46.9% y/y with a median price of $384,300, an increase of +17.1% y/y
  • South – existing sales fell -0.4% m/m though still up +47.2% y/y with a median price of $299,400, an increase of +22.6% y/y
  • West – existing sales dropped -4.1%m/m though still +61.6% y/y with a median price of $505,600, an increase of +24.3% y/y

 

Thanks to the National Association of REALTORS®, The Wall Street Journal, Mortgage Bankers Association and Inman.

 

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