Existing-home sales in May hit their highest pace in almost a decade, according to last month’s report from the National Association of Realtors (NAR). In anticipation of the report for June coming out next week, it is important to note the uptick in demand this spring that has been shown so far amidst lagging supply levels that pushed the median sales higher.
May’s total existing-home sales rose by 1.8 percent from April to a seasonally adjusted annual rate of 5.53 million and are were up 4.5 percent from a year ago. Distressed sales (foreclosures and short sales) fell to 6 percent of sales in May from 7 percent in April. This put May 4 percent lower than the previous year as well. Of this total 6 percent, five percent of May sales were foreclosures and 1 percent were short sales. Foreclosures sold for an average discount of 12 percent below market value in May, while short sales were discounted 11 percent.
According to realtor.com chief economist Jonathan Smoke, the May gain signals that the real estate market has continued to maintain a strong momentum.
“We are now in this year’s peak home buying months,” Smoke said. “This pace of sales should produce the gains we have been forecasting that will make 2016 the best year of home sales in a decade.”
Housing starts for June 2016, HUD/Census Bureau, Tuesday, July 19
Housing starts largely flattened out in May after showing signs of resuscitation in April. If June’s job report is any indication, housing starts may not restart anytime soon. The industry will find out on Tuesday, July 19, when HUD and the Census Bureau release the June 2016 Housing Starts report.
Approximately 287,000 jobs were added in June, which was a major increase from May’s dismal job gains total of 39,000. But according to Fannie Mae Chief Economist Doug Duncan, there was nothing in the report to encourage housing supply enthusiasts.
“No increase in construction employment during the month, and the three-month moving average fell for the first time in four years,” Duncan said. “That is consistent with recent housing starts data and offers no near-term hope of housing supply growth to offset strong house price appreciation trends and related affordability constraints. Without supply growth, decreases in interest rates are translating into house price increases in the presence of employment and household formation growth.”
May’s housing starts report found that privately-owned housing starts in May came in at a seasonally adjusted annual rate of 1.164 million. This is 0.3 percent lower than April, though still 9.5 percent up from last May. At the same time, single-family housing starts in May were at a rate of 764,000, which is 0.3 percent higher than in April.
Housing completions in May were equally up and down. Privately-owned housing completions were at a seasonally adjusted annual rate of 988,000, which while 5.1 percent above revised April estimates of 940,000, is 3.5 percent lower than in May 2015. Single-family housing completions in May were at a rate of 717,000, which is 2.3 percent above the revised April rate of 701,000