On June 22nd, the National Association of Realtors (NAR) announced the Existing Home Sales statistics for the month of May 2021. This report stated that May 2021’s seasonally adjusted home sales declined 0.9% month-over-month to 5.80 million units. It dropped 4 months in a row, but it still increased by a sizable 44.6% year-over-year from 4.01 million units in May last year. One can sense the persistently strong demand continuing to keep the existing homes market quite active in the US.
Existing home median price jumped by a sizable 23.6% to $350,300 from last May’s $283,500. It meant a consecutive 111 months of year-over-year increase since March 2012, attaining another new record!
According to market specialists, this trend will not stop until housing inventory expands. Although housing inventory at end of May gained 7.0% to 1.23 million units compared to last month, this level was still a substantial drop of 20.6% from 1.55 million units year-over-year, keeping inventory level at historical lows.
As a result, the average number of days on the market in May remained at a record short time of just 17 days, tying the previous record of 17 days in April. Compared to 26 days a year ago, it continues to show the powerful demand for existing homes. In May, 89% of the homes sold within a month after coming onto the market, the report stated.
Mortgage interest rates for 30-year fixed-rate loans broke through 3.00% from April’s 3.06% to 2.96% in May. This strengthened the view that 30-year fixed rate mortgage will stay below 3.5% for the rest of 2021.
Affordability issues persist but the outlook for the market looks positive, the report said. The supply situation is slowly but surely improving, giving buyers more options. Also, as supply increases, it should act as a damper on further increases in asking prices. Moreover, as developers of residential homes become more creative and efficient, they will be able to increase new housing starts, thereby adding to the ever more important residential home inventory, the report concluded.