Existing Home Sales measure closings on existing homes. These were down 0.9% in May. However, on an annual basis, sales increased to 45%, compared to May of 2020. This makes sense, as the pandemic and shutdowns impacted nearly everything this time last year. This blog post examines how low inventory hinders home sales.
Inventory concerns continue to plague buyers. However, these improved from April to May. In fact, some 1.23 million homes went on the market at the end of May. This increased 7% from April; but was down almost 21% year-over-year. The low number of available homes helped inventory move quickly, with homes on the market for an average of just 17 days.
Median Home Prices
The median home price, at $350,300, reflects a record high (up 24% year over year). Note that despite what the media reports, the median home price does not equal appreciation. It simply means half the homes sold did so above that price. Meanwhile, half were below it. The rise resulted from the number of higher-end homes that sell.
Low End Sales
Sales on the low end decreased. Meanwhile, sales of homes between $500,000 to $750,000 increased by 122%. Homes between $750,000 to $1 million were up 178%. And homes above $1 million were up 245%. Real appreciation hovers around 13%. And while that remains high, it still rests beneath the 24% rise in the median home price.
Speaking about affordability, first-time homebuyers remained at 31% for three out of the last four months. This reflects a decent level, considering the stiff competition for homes on the lower end and the lack of inventory. Also of note, cash buyers decreased from 25% to 23%. Simultaneously, investors purchased 17% of homes, which remained stable from April’s report.
New Home Sales Also Decline in May
- New Home Sales, which measure signed contracts on new homes, decreased by 6% from April to May. Factoring in the revisions to April’s sales, this figure totals a 12% decline in May.
- Inventory remains challenging, as only 330,000 new homes were available for sale at the end of May. This represents a 5.1 months’ supply of homes.
- The median home price of $374,400 is up 18% from last year.
- Builders turn down the opportunity to build lower-price homes. They do so because there is not enough profit margin due to labor costs and the lumber and other material shortages.
- As a result, median home price continues to climb.
Mortgage Bonds continue to trade in a wide range (between support at 102.734 and overhead resistance at the 25-day Moving Average). Be on guard when bonds trade in such a wide range. Prices remain susceptible to whipsaws and big price movements, because of reduced support.
About SoCal Platinum Properties, Inc.
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