ARLINGTON, Va.—Existing-home sales increased 2.5% to a seasonally adjusted annual rate of 5.3 million units in May. NAFCU Chief Economist and Vice President of Research Curt Long noted that even with modest gains in May, he expects home sales to stagnate in the coming months.
"Home buying conditions are ripe for growth, but so far a breakthrough has failed to materialize," said Long in a new NAFCU Macro Data Flash report. "Mortgage rates have steadily declined since last November, and households are benefitting from a strong jobs market. Nevertheless, buyers are reluctant to pull the trigger. Supply constraints persist, which have led to strong price growth. Homebuilder confidence ebbed in June due to concerns over trade and construction costs.
"A rebound in the housing market would provide a sorely needed boost to a sagging economy, but NAFCU remains doubtful that one is forthcoming,” continued Long. “Home sales should show relatively flat growth through the remainder of the year.”
Sales increased in all four regions during the month. Sales grew in the Northeast region 4.7%, followed by the Midwest (+3.4%), and South (+1.8%) and West (+1.8%).
Housing Supply Grows
Based on current sales, there were 4.3 months of supply at the end of May, up from 4.2 months in April. Analysts consider 6 months of inventory to represent a rough balance between supply and demand, Long said.
The median existing home price increased from $266,900 in April to $277,700 in May (not seasonally adjusted). That amount represents a 4.8% increase from the median price a year ago.