Washington, DC, June 25--Existing single-family home sales rose in May to the highest monthly pace on record, according to the National Association of Realtors.
Existing-home sales increased 2.6 percent to a seasonally adjusted annual rate* of 6.80 million units in May from a level of 6.63 million units in April. Last month's sales activity was 15.8 percent above the 5.87-million unit pace in May 2003; the previous record was 6.68 million in September 2003.
David Lereah, NAR's chief economist, expected the strong performance.
"Fundamentals are still very favorable for a vibrant market. In part, the record results from a natural 'fence-jumping' by buyers getting into the market after mortgage interest rates began to rise at a sharper clip in April," he said. "This may be the last peak in home sales for a while and existing-home sales are likely to be slower during the second half of the year. Even so, they will remain at strong levels and 2004 is on track to be a record."
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.27 percent in May, up from 5.83 percent in April; it was 5.48 percent in May 2003.
NAR President Walt McDonald, broker-owner of Walt McDonald Real Estate in Riverside, Calif., said mortgage interest rates have stabilized just below 6.3-percent. "Aside from the last two years, we have to go all the way back to 1965 to find mortgage interest rates as low as they are today," he said.
"The growth in home prices hasn't slowed yet, but in the second half of the year we're expecting an ease in sales to take some of the pressure off of appreciation rates resulting from lean inventories of homes available for sale," McDonald said. "This will be a healthy change for the housing market because slower appreciation will help to preserve favorable housing affordability conditions in the future."
The national median existing-home price was $183,600 in May, up10.3 percent from May 2003 when the median price was $166,400. 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 rose 0.8 percent from April to a total of 2.38 million existing homes available for sale, which represents a 4.2-month supply at the current sales pace.
Regionally, existing-home sales in the West rose 5.5 percent in May to a record annual rate of 1.93 million units, and were 22.9 percent above May 2003. The median existing-home price in the West was $257,900, up 12.3 percent from a year ago.
The existing-home sales pace in the South increased 3.8 percent in May to a record annual rate of 2.75 million units, and was 19.0 percent above the same month a year ago. The median price of an existing home in the South was $168,500, which was 9.4 percent higher than May 2003.
Existing-home sales in the Midwest slipped 0.7 percent in May to an annual rate of 1.40 million units, second only to a record 1.41 million in April, and were 6.1 percent above a year ago. The median price in the Midwest was $152,700, up 10.2 percent from May 2003.
Existing-home sales in the Northeast declined 1.4 percent from April to a pace of 720,000 units in May, but were 7.5 percent higher than May 2003. The median resale price in the Northeast was $213,200, up 18.6 percent from a year ago.
