The recovery of the U.S. housing market now appears to be well under way. While demand is still high, even with credit conditions constraining buyers, the low level of inventory is having a significant effect in most markets. This is likely to persist through the year due to the rapid sales velocity and only modest additions to inventory levels. May saw a significant jump in sales velocity where existing home sales were at the highest point since November 2009, when the annualized sales pace jumped to 5.44 million due to the home buyer tax credit. Prices continued to rise in May, marking the sixth consecutive month of double-digit price growth. With affordability still at historically high levels and the market continuing to improve, it could be an opportune time for a well-informed buyer or seller to enter the market.
Key point from video: Preparing for Repairs
Jay Papasan talks about how KW Research has shown that the roof, plumbing, electrical and heating and cooling systems are the most common items that seem to need to be repaired before a house is sold. So it is important for a buyer to learn as much as possible about the systems of a house that have or may not have been addressed. These items could wind up costing you addtional time and money. Before sitting down to closing, hire a qualified Home Inspection Professional to evaluate the home.
Reviewing this inspection report with Andy Reynolds, your local Lake Wylie Real Estate Specialist, will help you understand which repairs should be negotiated with the seller and which ones you should budget for yourself.
Home sales improved in May with total existing home sales rising to 4.2% (5.18 million from 4.97 million) from April. The positive housing numbers are indicative of the U.S. economy strengthening. Existing home sales are at the highest level since November 2009 when the market jumped to 5.44 million as buyers took advantage of the home buyer tax credit. May marked the twenty-third month that sales have recorded year-over-year gains.
Median home prices continued to rise by double-digit rates from a year earlier with an increase of 15.4% from last May. This marks six straight months of double-digit increases and is the strongest price gain since October 2005, which jumped a record 16.7% from a year earlier. The national median existing home price for all housing types was $208,000 in May, which is a 7.8% increase from the median home price in April ($192,800). The median price level has been gaining year-over-year for fifteen consecutive months as of May. The last time there were fifteen consecutive months of year-over-year price increases was from March 2005 to March 2006.
Inventory- Month’s Supply
Total housing inventory at the end of May rose 3.3% to 2.22 million existing homes, which represents a 5.1-month supply of homes. This is down from the 5.2-month supply in April. Inventory is down 10.1% below year-ago levels, when there was a 6.6-month supply, but this is indicative of the current recovery. National Association of Realtors Chief Economist Lawrence Yun states, “The housing numbers are overwhelmingly positive. However, the number of available homes is unlikely to grow, despite a nice gain in May, unless new home construction ramps up quickly by an additional 50%.”
Long-term U.S. mortgage rates jumped half a point in May, reflecting consumer confidence in the economy and the very active housing market. The 30-year fixed rate mortgage averaged 3.81% in May, which was a high not seen in over a year. The 15-year fixed rate mortgage had an average rate of 2.98%, while the 1-year adjustable rate mortgage slipped to 2.54% in May. Rates have stayed fairly close to April levels for most of the month until the growing economy and increasing momentum caused the leap in interest rates at the end of May. It will be interesting to see if this gain carries over into the next month.
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