May Shows a Continued Strong Pace for Existing-Home Sales

Existing-home sales remained at elevated levels in May on buyer response to the tax credit, characterized by stabilizing home prices and historically low mortgage interest rates, according to the National Association of Realtors®. Gains in the West and South were offset by a decline in the Northeast; the Midwest was steady.

Existing-home sales (1), which are completed transactions that include:

• single-family
• townhomes
• condominiums
• and co-ops,

were at a seasonally adjusted annual rate of 5.66 million units in May, down 2.2 percent from an upwardly surge in April. May closings are 19.2 percent above May 2009; April sales were revised to show an 8.0 percent monthly gain.

Regionally, existing-home sales in the West rose 4.9 percent to an annual rate of 1.29 million in May and are 15.2 percent higher than May 2009. The median price in the West was $221,300, up 7.4 percent from a year ago.

Lawrence Yun , NAR chief economist, said he expects one more month of elevated home sales. "We are witnessing the ongoing effects of the home buyer tax credit, which we'll also see in June real estate closings," he said. "However, approximately 180,000 home buyers who signed a contract in good faith to receive the tax credit may not be able to finalize by the end of June due to delays in the mortgage process, particularly for short sales.

As the leading advocate for homeownership issues, NAR is supporting Senate amendments to extend the home buyer tax credit closing deadline through September 30 for contracts written by April 30.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said home prices have been stabilizing all year. "With distressed sales at roughly the same level as a year ago, the gain in home prices is a hopeful sign that the market is in a good position to stand on its own without further government stimulus," she said.

"Very affordable mortgage interest rates and stabilizing home prices are encouraging home buyers who were on the sidelines during most of the boom and bust cycle," Golder said.
    
Pending home sales are expected to decline notably in May and June from the spring surge, but Yun added that job growth and a manageable level of foreclosures are keys to sales and price performance during the second half of the year.

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1Existing-home sales, differs from the U.S. Census Bureau's series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 to 90 percent of total home sales, are based on a much larger sample and typically are not subject to large prior-month revisions.