U.S. Real Estate Rebound
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American home sales are growing as more first-time homebuyers enter the market, driving demand for existing homes throughout the country.
According to the National Association of Realtors (NAR), existing-home sales saw a sharp rise in May, rising 5.1% on a seasonally adjusted annual rate from the prior month. Sales also rose 9.2% on a year-over-year basis, when only 4.9 million units annualized sold compared to the 5.35 million annualized in May.
American home sales are growing as more first-time homebuyers enter the market, driving demand for existing homes throughout the country.
According to the National Association of Realtors (NAR), existing-home sales saw a sharp rise in May, rising 5.1% on a seasonally adjusted annual rate from the prior month. Sales also rose 9.2% on a year-over-year basis, when only 4.9 million units annualized sold compared to the 5.35 million annualized in May.
The rise in demand is also pinching housing supply, in a trend that may cause home prices to continue to rise in the near term. NAR Chief Economist Lawrence Yun noted that prices are likely to rise without the addition of new units. “Solid sales gains were seen throughout the country in May as more homeowners listed their home for sale and therefore provided greater choices for buyers,” he noted, adding, “overall supply still remains tight, homes are selling fast and price growth in many markets continues to teeter at or near double-digit appreciation. Without solid gains in new home construction, prices will likely stay elevated — even with higher mortgage rates above 4 percent.”
Median Price Growth Rate Well Above Inflation
Home prices are also increasing above the rate of inflation, with the median existing-home selling for $228,700 in May. That is 7.9% higher than May 2014, and marks over three years of solid year-over-year price gains in the housing market.
According to NAR, the fear of upcoming interest rates is driving more families into the housing market. “With interest rates on the rise, many families wanting to buy are looking to lock-in at current rates and move into their new home before the school year starts. Holding off on TRID implementation through the summer helps these buyers avoid any disruption or delays in closings that could develop once the regulation goes into effect,” said NAR President Chris Polychron.
All Regions Benefit
The rise in home sales occurred in all four regions of the country, with the highest growth in the northeast. That region was recently beleaguered by an unusually cold winter, which many analysts expected would cause a temporary slide in economic activity, including home sales.
Now in spring, existing-home sales rose 11.3% to an annual rate of 690,000 in the northeast. In the Midwest, south, and west, existing-home sales rose more modestly—slightly above 4%—while prices rose much higher than in the northeast. The largest price gains were in the west, where the median price rose to $324,000, 10.2% above May of last year.
Economists expect the trend of rising house prices and sales to continue, although growth rates are likely to moderate in the coming years.
