May 2021 Existing and Pending Home Sales

May 2021 Existing and Pending Home Sales

Jul 15, 2021
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Price appreciation is occurring in the market at unprecedented levels, with a 24% increase in the median home price from one year ago. Home sales declined for the fourth consecutive month by 1%, while up 45% from one year ago. Record-high home prices and lack of inventory are both limiting potential home sales.

Hello. This is Lawrence Yun, chief economist with the National Association of REALTORS®. The market: we have never seen price appreciation of this magnitude. Twenty-four percent increase in the median price from one year ago, May of 2020 to May of 2021. Twenty-four percent price appreciation, strongest ever, now surpassing 350 thousand dollars nationwide.

Furthermore, the home prices are continuing to hit record-high levels now, with prices rising so much it's beginning to squeeze away some buyers.

Home sales decline for the fourth straight month. Latest 5.8 million on an annualized basis, so it's steadily sliding down. We are still above the pre-pandemic home sales activity but only by a small percentage. It used to be, just a few months ago, about 20% above pre-pandemic, so the sales activity is clearly being hurt due to the affordability challenges and also the lack of inventory at the affordable price points.

Anything under $300,000, very little inventory. Nonetheless, given that the sales activities are coming down, we may be sensing some turn in the market. We are seeing less prevalence of multiple offers. It is still a seller's market, no doubt, but the prevalence of the multiple offers or the days on the market, very swift at 17 days, but it is not falling anymore and it may begin to increase in the upcoming months. Still a sellers' market, but people need to be very cautious how they price their home to attract buyers, knowing that these sales activities are declining somewhat.

Now, the most affordable region of the country is the Midwest region, whether one is looking at Indianapolis, Cincinnati, Cleveland, Des Moines, prices are affordable, therefore, it is the only region of the country with increased home sales. The other three major regions, the West region, South, Northeast, saw a decline in sales activity. More notable decline out in the West for the second consecutive month. The west region is the most expensive region, clearly implying that affordability is becoming a major hurdle for increased transactions out in the West region.

Another interesting development is that the vacation home market is outperforming the primary home market. We completed a study from last year as well as year-to-date. Clearly, the vacation home sales are much higher now compared to pre-pandemic, much more so than the primary home, and the price appreciation in the vacation counties, whether it is out in the Smoky Mountains region, Lake Tahoe, Cape Cod, Upper Michigan, the price appreciation showing a stronger rise compared to the primary home market.

In summary, the housing market has shown exceptional performance, but expect more inventory coming onto the market, the market to be calmer.

As we proceed through the remainder of the year, it will still be a sellers' market. The first-time buyers will face some challenges on the affordability front, but calming of the market and less need for hurried decision should be a welcoming trend. So thank you for listening, and be well and be safe.

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