Pending and existing home sales are rising in the USA, as low mortgage rates and increased inventory boost demand from buyers.
All four regions of the country saw increases in pending sales, according to the National Association of Realtors, led by the Northeast and West. Sales jumped 6.1 per cent in May 2014, the largest month-over-month gain since April 2010.
While affordability and access to credit remains an area of concern for first-time buyers, who accounted for only 27 percent of existing-home sales in May, conditions are broadly favourable for buyer. Indeed, alongside the temporary mortage rate improvements, inventory is helping to slow down price growth, keeping the market accessible to house hunters.
Total housing inventory at the end of May climbed 2.2 percent to 2.28 million existing homes, which represents a 5.6-month supply at the current sales pace, down slightly from 5.7 months in April. Unsold inventory is 6 per cent higher than a year ago.
As a result, median existing home prices climbed 5.1 per cent in May 2014 year-on-year to $213,400, a slower annual increase than the 5.2 per cent rise recorded in April – and far below the 8.6 per cent year-on-year increase in the first quarter of 2014.
Completed sales climbed 4.9 per cent in May 2014 month-on-month, although they remain 5 per cent down year-on-year.
Lawrence Yun, NAR chief economist, expects sales to continue climbing in the second half of the year: “Sales should exceed an annual pace of five million homes in some of the upcoming months behind favorable mortgage rates, more inventory and improved job creation.
“However, second-half sales growth wonât be enough to compensate for the sluggish first quarter and will likely fall below last yearâs total.”
Photo credit: Cyndie
