May was a good month to be a home seller. The median existing-home price rose 4.2% in a month, reaching $208,000 in May, according to data from the NATIONAL ASSOCIATION OF REALTORS®.
A sellers’ market could continue in many areas in the coming year
because the supply of homes for sale isn’t keeping up with buyer demand
as the economy recovers.
“The housing numbers are overwhelmingly positive,” said NAR Chief
Economist Lawrence Yun. “However, the number of available homes is
unlikely to grow, despite a nice gain in May, unless new home
construction ramps up quickly by an additional 50%. The home price
growth is too fast, and only additional supply from new homebuilding can
moderate future price growth.”
Sales have stayed above year-ago levels for 23 months, while the
national median price shows 15 consecutive months of year-over-year
At the end of May, 2.22 million existing homes were for sale. At the
rate homes are selling, that’s a 5.1-month supply, down from 5.2 months
in April. At this point last year, there was a 6.5-month supply of homes
Home Prices Up
The national median existing-home price reached $208,000 in May, up
15.4% from May 2012, the strongest price gain since October 2005, when
home prices jumped a record 16.6% from a year earlier.
NAR President Gary Thomas said market conditions today are vastly
different than during the housing boom. “The boom period was marked by
easy credit and overbuilding, but today we have tight mortgage credit
and widespread shortages of homes for sale,” he said.
“The issue now is pent-up demand and strong growth in the number of
households, with buyer traffic 29% above a year ago, coinciding with
several years of inadequate housing construction. These conditions are
contributing to sustainable price growth,” Thomas said.
Single-family home sales rose 5.0% in May and are 12.7% higher than
May 2012. The median existing single-family home price was $208,700 in
May, up 15.8% above a year ago, the strongest increase since October
2005, when it jumped 16.9% from a year earlier.
Existing condominium and co-op sales slipped 1.7% in May, but are
13.7% above a year ago. The median existing condo price was $202,100 in
May, 11.8% above May 2012.
Regional Home Prices
In the Northeast, home sales rose 1.6% in May and are 8.3% above May
2012. The median price in the Northeast was $269,600, up 12.3% from a
In the Midwest, home sales jumped 8.0% in May and are 16.3% higher
than a year ago. The median price in the Midwest was $159,800, up 8.2%
from May 2012.
In the South, home sales rose 4.0% in May and are 16.1% above May
2012. The median price in the South was $183,300, which is 15.0% above a
In the West, home sales increased 2.5% in May and are 7.0% above a
year ago. With the tightest regional supply, the median price in the
West was $276,400, up 19.9% from May 2012.
Falling Foreclosures and Short Sales
About one in five home sales were foreclosures or short sales, the
lowest share since monthly tracking began in October 2008. Fewer
distressed homes, which generally sell at a discount, account for some
of the price gain.
Foreclosures sold for an average discount of 15% below market value in May, while short sales were discounted 12%.
Homes Selling Faster
Homes are selling faster, too. The median time on market for all
homes was 41 days in May, down from 46 days in April. That’s 43% faster
than the 72 days on market in May 2012. Short sales were on the market
for a median of 79 days, while foreclosures typically sold in 43 days
and non-distressed homes took 39 days. Nearly half (45%) of all homes
sold in May were on the market for less than a month.
Who’s Buying Homes?
Cash-rich investors continued to play a big role in many housing
markets. All-cash sales were 33% of transactions in May, up from 28% in
May 2012. Individual investors, who account for many cash sales,
purchased 18% of homes in May.
First-time buyers accounted for 28% of purchases in May, compared with 29% in April and 34% in May 2012.