Tight inventories of listings for sale and rising residential mortgage interest rates and home values continued to deflect existing home sales in May 2018 as reported by the National Association of Realtors® (NAR). Actual sales in May 2018 of 536,000 compared to 555,000 a year ago were down 3.4 percent, but sales year-to-date dipped just 1.39 percent. From a seasonally adjusted annualized rate (SAAR), sales were off 3.0 percent versus a year ago at a pace of 5.43 million transactions.
The median price of $264,800 in May 2018 was up 4.9 percent compared to a year ago, while the average price of $303,500 ratcheted up 3.1 percent in the same period. While the number of active listings increased by 2.8 percent to 1.85 million in May 2018 compared to April, the number of active listings dropped 6.1 percent compared to a year ago. The number of active listings has now dropped for 36 consecutive months on a year-over-year comparison.
The following graph shows the trend in housing sales based on a trailing 12-month basis (TTM), but with monthly median prices. Sales have wobbled in the past year with a slight downward trend appearing in recent months.
Sales and median prices are shown on a monthly basis in the following two graphs. Sales have been up in two of the five months this year and down in three months compared to a year ago. Median price, on the other hand, continued on an upward accent driven by minimal inventory of just 4.1 months with 6.0 months considered normal and contrasted to 4.2 months a year ago
The trend and corresponding seasonality in average prices are shown in the next graph. The average price of $303,500 in May 2018 tied the all-time record posted in June 2017.
Other metrics and insights from the May 2018 NAR release included:
- Sales in closings at $100,000 or less were down 18.0 percent in May 2018 vs a year ago
- Sales from $100,000 to $250,000 were down 5.6 percent in May vs a year ago
- Sales closing from $250,000 to $500,000 were up 5.8 percent year-over-year in May
- Sales from $500,000 to $705,000 were up 4.5 percent
- Sales from $750,000 to $1 Million rose 9.7 percent
- Closing at $1 million and up increased a massive 14.4 percent in May compared to a year ago
- Median price has now increased 75 consecutive months on a year-over-year basis
- The typical property was on the market just 26 days in May 2018 before a signed contract was delivered, down slightly from 27 days a year ago
- Almost six-in-ten home sales (58 percent) in May 2018 were on the market less than one month
- First time-buyers completed three-in-ten transactions in May (31 percent), down slightly from 33 percent a year ago. Contrary to expectations that Millennials would not be buying homes, for the third year in a row they are largest homebuyer population cohort
- All-cash sales made up one-in-five closings in May (21 percent), down slightly from 22 percent a year ago
- Distressed sales continue to dwindle, making up just 3.0 percent of May sales – the lowest ever since NAR commenced tracking this metric in October 2008
- 2 percent of April’s distressed sales were foreclosures and just 1.0 percent short sales
To read the entire NAR press release and access home sales data series click https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales
Where the U.S. housing market goes will be a function of jobs, interest rates, prices, incomes and inventory. The number of sales typically peak in June (the past four years) or July and August. The prime sales period is directly in front of us, with current sales off minimally.
I do now believe that 2018 housing sales will be slightly less than a year ago, but still strong. People have to live someplace, and in the majority of markets buying makes more sense than renting.