Washington, DC, June 25--Existing single-family home sales rose in May and were at the third-highest monthly pace on record, according to the National Association of Realtors.
Existing home sales increased 1.2 percent to a seasonally adjusted annual rate of 5.92 million units in May from an upwardly revised level of 5.85 million units in April. Last month's sales activity was 4.4 percent above the 5.67-million unit pace in May 2002. The record is a 6.10-million unit sales rate in January 2003, while the second highest is 5.96 million in January 2002.
David Lereah, NAR's chief economist, said home sales defy earlier expectations. "The pace of home sales so far this year has been higher than projected, and we still expect sales activity to ease a little but to end this year with a new annual record," he said. "It all comes down to historically low mortgage interest rates, which have increased the purchasing power for a growing number of households. Strong activity by first-time buyers is the key to the overall health of the market because it provides liquidity for people wishing to trade to another home. All sectors of the market are experiencing brisk activity."
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was a record-low 5.48 percent in May, down from 5.81 percent in April and 6.81 percent in May 2002; Freddie Mac started tracking interest rates in 1971.
NAR President Cathy Whatley, owner of Buck & Buck Inc. in Jacksonville, FL, said interest rates should be close to bottom. "Over the last couple of weeks, the 30-year fixed-rate mortgage has been at 5.21 percent, which is the lowest weekly rate on record," she said. "With the overall economy expected to improve during the second half of the year, it's unlikely to see mortgage interest rates move much lower. Even so, we don't expect them to rise quickly either our current forecast projects a gradual rise to 5.7 percent by the end of the year."
The national median existing home price was $167,000 in May, up 7.7 percent from May 2002 when the median price was $155,000. The median is a typical market price where half of the homes sold for more and half sold for less.
Housing inventory levels at the end of May fell 7.6 percent from April to a total of 2.30 million existing homes available for sale, which represents a 4.7-month supply at the current sales pace.
Regionally, existing home sales in the Midwest rose 5.5 percent in May to an annual rate of 1.35 million units, and were 8.9 percent above a year ago. The median price in the Midwest was $141,000, up 7.3 percent from May 2002.
Existing home sales in the Northeast increased 3.0 percent from April to a pace of 680,000 units in May, and were 1.5 percent higher than May 2002. The median resale price in the Northeast was $180,000, up 15.0 percent from a year ago.
The existing home sales pace in the South slipped 0.4 percent in May to an annual rate of 2.30 million units, but was 5.0 percent above the same month a year ago. The median price of an existing home in the South was $154,300, which was 4.3 percent higher than May 2002.
Home resales in the West were selling at an annual rate of 1.59 million units in May, down 0.6 percent from April but were 1.3 percent above May 2002. The median existing-home price in the West was $229,300, up 7.4 percent from a year ago.
