WASHINGTON (June 27, 2006) – Sales of existing homes experienced a minor decline in May with home prices rising near normal rates, according to the National Association of Realtors®(NAR).
Total existing-home sales – including single-family, townhomes, condominiums and co-ops – eased 1.2 percent to a seasonally adjusted annual rate1 of 6.67 million units in May from a pace of 6.75 million in April, and were 6.6 percent below the 7.14 million-unit level in May 2005.
David Lereah, NAR’s chief economist, said conditions are mixed around the country. “There’s now a clear pattern of slower home-sales activity in many higher cost markets, which are more sensitive to rises in interest rates, and higher home sales in moderately priced areas which have experienced job growth,” he said. “Although mortgage interest rates remain historically low, the uptrend in interest rates this year is affecting those buyers who are at the margins of affordability.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.60 percent in May, up from 6.51 percent in April; the rate was 5.72 percent in May 2005.
The national median existing-home price2 for all housing types was $230,000 in May, up 6.0 percent from May 2005 when the median was $217,000. The median is a typical market price where half of the homes sold for more and half sold for less. “Overall price appreciation has returned to normal levels as the supply of homes on the market has risen to a balanced range,” Lereah said.
Total housing inventory levels rose 5.5 percent at the end of May to 3.60 million existing homes available for sale, which represents a 6.5-month supply at the current sales pace. NAR President Thomas M. Stevens from Vienna, Va., said it’s important to keep the current market in perspective. “We didn’t break the 6-million sales barrier until 2003, so the current level of home sales is still pretty healthy by historic standards,” said Stevens, senior vice president of NRT Inc. “Housing is continuing to support the overall economy by providing a sound foundation for other sectors to grow – the normalization that is taking place in the housing market is good for the long-term health of the industry.”
Existing condominium and cooperative housing sales rose 1.9 percent to a seasonally adjusted annual rate of 852,000 units in May from a pace of 836,000 in April, but were 6.6 percent below the 912,000-unit pace in May 2005. The median existing condo price3 was $229,300 in May, up 1.9 percent from a year earlier.
Single-family home sales slipped 1.5 percent to a seasonally adjusted annual rate of 5.82 million in May from 5.91 million in April, and were 6.6 percent below the 6.23 million-unit level in May 2005. The median existing single-family home price was $229,700 in May, up 6.4 percent from a year ago.
Regionally, existing-home sales in the Northeast dropped 4.2 percent to an annual sales rate of 1.13 million units in May, and were 5.0 percent below a year ago. The median price in the Northeast was $287,000, up 7.1 percent from May 2005.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
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1The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns.
Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings. This 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 percent of total home sales, are based on a much larger sample – nearly 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.
2The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.
3Because there is a concentration of condos in high-cost metro areas, the national median condo price can be higher than the median single-family price. In a given market area, condos typically cost less than single-family homes.
Existing-home sales for June will be released July 25. The next Pending Home Sales Index will be on July 6 and the forecast will be revised July 11.Visit my web site for additional resources and services: www.LawrenceYerkes.com
and visit BestHomes-NJ.com for the latest New Jersey Real Estate property listings (residential, commercial, multi-family, farm, land)
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The growing mandate for green design in home building is explored comprehensively for the first time by the National Building Museum in "The Green House: New Directions in Sustainable Architecture and Design." The milestone exhibition will remain on view for an entire year and will be supported by a fully-illustrated catalog of the same name, co-published by the Museum and Princeton Architectural Press; a major scholarly symposium; a wide array of tours, talks, workshops and special family programming; and a website focusing on the marketplace, methods, principles, and history of sustainable design. After its showing at the National Building Museum, "The Green House" will travel nationwide. Potential venues include museums in Los Angeles, Chicago, and New York. NAR is among the supporting organizations of the exhibit. (Source: Nation Building Museum) 
Lawrence Yerkes 
