Existing home sales fell for the third straight month in May, but the current month’s data reflects contract signings in March and April at the worst points of the shutdown. It is expected that this may be the bottom for home resales.
National Association of Realtors (NAR) chief economist Lawrence Yun said that “sales will surely rise in the upcoming months with the economy reopening and could even surpass one-year-ago figures in the second half of the year”.
Data released Monday by the NAR showed that overall existing home sales fell by 9.7% to a 3.91 million annual rate in May, well below expectations for a 4.29 million rate, after falling to 4.33 million in April. Before seasonal adjustment, sales were down 0.3% from April and down 31.4% from a year ago.
Single-family home sales fell by 9.4%, while condo sales fell by 12.8%. The NAR said that it is seeing a migration of home buyers out of cities to the suburbs.
There were sales declines in all four regions of the country.
Inventories of homes for sale rose by 6.2% in May, but were still down 18.8% from its level a year ago. Current homeowners are cautious to move to quickly to upgrade to a new home considering the current uncertainty. When combined with the sales decline, the month’s supply jumped to 4.8 months from 4.0 months in April.
New home construction rose slightly in May, based on data released on Wednesday. However, completions of new homes fell slightly. With fewer new homes to trade up to, inventory of existing homes for sale will remain depressed.
The median sales price of existing homes fell slightly in May, but was still up 2.3% year/year. The market for homes remained brisk despite the sales decline, as NAR said that 58% of sales have occurred less than a month after their initial listing.