Existing-home sales plunged to their lowest level in nearly a decade in May, marking the third consecutive month of decline as a result of the coronavirus pandemic, according to a report from the National Association of Realtors.
Total existing-home sales fell 9.7% from April to a seasonally adjusted rate of 3.91 million, their lowest level since late 2010. Sales fell 26.6% year over year. However, Lawrence Yun, NAR chief economist, said that he expects a sales rebound in coming months.
Sales completed in May reflect contract signings in March and April – during the strictest times of the pandemic lockdown and hence the cyclical low point,” Yun said. “Home 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.”
The median existing-home price in May was $284,600, up 2.3% year over year. May’s price boost marks 99 consecutive months of year-over-year gains. Total housing inventory at the end of the month was 155 million units, up 6.2% from April but down 18.8% year over year. Unsold inventory is at a 4.8-month supply at the current sales pace, up from 4 months in April.
“New home construction needs to robustly ramp up in order to meet rising housing demand,” Yun said. “Otherwise, home prices will rise too fast and hinder first-time buyers, even at a time of record-low mortgage rates.”
First-time buyers were responsible for 34% of sales during the month, down from 36%. in April and up from 32% in May 2019. Fifty-eight percent of homes sold in May were on the market for less than a month.
“Although the real estate industry faced some very challenging circumstances over the last several months, we’re seeing signs of improvement and growth, and I’m hopeful the worst is behind us,” said Vince Malta, president of NAR. “NAR, along with our partners and 1.4 million members, are already working to reignite America’s real estate industry, which will be a key driver in our nation’s economic recovery.”