Economy Watch: Existing Home Sales Rise, But Still Sluggish

By Dees Stribling, Contributing Editor

Total existing U.S. home sales rose 4.9 percent to an annualized rate of 4.89 million units in May from an upwardly revised 4.66 million units in April, according to the National Association of Realtors on Monday. Even so, that total remains 5 percent below the 5.15 million-unit level that existing home sales reached in May 2013.

Total housing inventory at the end of May climbed 2.2 percent to 2.28 million existing homes available for sale, which represents a 5.6-month supply at the current sales pace, down from 5.7 months’ supply in April, notes NAR. Unsold inventory is 6 percent higher than a year ago, when there were 2.15 million existing homes available for sale.

The Realtors also reported that the median existing-home price for all housing types in May was $213,400, which is 5.1 percent above the same month in 2013. “Rising inventory bodes well for slower price growth and greater affordability, but the amount of homes for sale is still modestly below a balanced market,” NAR chief economist Lawrence Yun explains. “New home construction is still needed to keep prices and housing supply healthy in the long run.”

Home price gains slowing down

In other housing news, the data and analytics division of Black Knight Financial Services (formerly the LPS Data & Analytics) released its latest Home Price Index report, based on residential real estate transactions. The index was up 6.4 percent in April compared with the same month a year earlier, which is a reasonable increase, but not nearly as much as only a few months ago.

The year-over-year increases for most months in 2013 were, in fact, more than 7 percent. In both August and September 2013, according to Black Knight, the annual increase peaked at 9 percent, but the rate’s been sliding ever since. The index represents the price of non-distressed sales by taking into account price discounts for REO and short sales.

April’s month-over-month change was a rise of 0.9 percent. Some metro areas are still recording large (or largish) increases in home prices, Black Knight says. For instance, Austin and San Francisco both saw rises of 1.8 percent, and Atlanta, Boston, and Bend, Ore., were up 1.7 percent. On the other hand, Tucson and Phoenix prices were completely stagnant in April, and Lakeland, Fla., lost 0.1 percent.

Wall Street barely moved at all on Monday, with the Dow Jones Industrial Average losing 9.82 points, or 0.06 percent, and the S&P 500 down a microscopic 0.01 percent. The Nasdaq eked out an equally microscopic 0.01 percent gain.