Home sales nationwide were essentially unchanged in May, according to the National Association of Realtors® (NAR). Total existing-home sales – including single-family, townhomes, condominiums and co-ops – eased by 0.3 percent to a seasonally adjusted annual rate of 5.99 million units in May from an upwardly revised pace of 6.01 million in April. They were 10.3 percent below the May 2006 level.
"I think psychological factors are currently the biggest drag on the housing market, in addition to a disruption from tighter credit for subprime borrowers," said Lawrence Yun, NAR senior economist. "Household formation has slowed dramatically since late 2006, implying that many people are doubling-up – they're adding roommates or moving in with parents.
Yun added, "The market is underperforming when you consider positive fundamentals such as the strength in job creation, economic growth, favorable mortgage interest rates and flat home prices. It appears some buyers are simply waiting for more signs of stability before they get serious about getting into the market."
The national median existing-home price for all housing types was $223,700 in May, which is 2.1 percent below May 2006 when the median was $228,500.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.26 percent in May, up from 6.18 percent in April; the rate was 6.60 percent in May 2006.
NAR President Pat V. Combs said higher inventories are helping to offset an affordability impact from higher mortgage interest rates.
"Although mortgage interest rates are trending up, they are historically favorable," she said. "The good news is buyers have more negotiating power with a fairly large supply of homes available in much of the country. Buyers who've been on the sidelines may want to take a closer look at current conditions in their area – if they wait for sales to rise, their choices and negotiating position won't be as good as they are now."
Single-family home sales slipped 0.8 percent in May from the previous month, and they were 10.8 percent lower than a year ago. The median existing single-family home price was $223,000 in May, which is 2.4 percent lower than in May 2006.
Regionally, existing-home sales in the Northeast rose 5.8 percent in May, but were 3.5 percent lower than May 2006; in the Midwest, they were up 0.7 percent, but were 6.6 percent below a year ago; in the West, they were down 0.8 percent and 16.3 percent below the prior year; and in the South, sales fell 3.4 percent and were 11.9 percent below a year ago.
The median existing-home price in the Northeast was $282,700, which was 0.5 percent higher than in May of 2006; in the Midwest, $168,800, which was 1.7 percent below May 2006; in the West, $341,900, down 0.5 percent from last year; and in the South, $184,000, down 3.8 percent from May 2006.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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