June 21, 2011 (Chris Moore)
Existing home sales declined in May according to the latest report released by the National Association of Realtors (NAR). Completed transactions that include single-family homes, townhomes, condominiums, and co-ops declined 3.8 percent from April to May 2011.
Lawrence Yun, chief economist at NAR, blamed the decline on temporary factors such as spiking fuel prices and widespread severe weather, but felt that current housing market activity indicates a very slow pace of broader economic activity and as the temporary factors dissipate, a much stronger second half of the year was anticipated.
Yun also continued to reiterate his belief that the lending community is being overly restrictive on loan underwriting standards which he feels is clearly holding back the recovery.
“Even with recent economic softness, this is a disappointing performance with home sales being held back by overly restrictive loan underwriting standards,” he said. “There’s been a pendulum swing from very loose standards which led to the housing boom to unnecessarily restrictive practices as an overreaction to the housing correction – this overreaction is clearly holding back the recovery.”
Year-over-year prices continued to drop as the national median price for all housing types was $166,500 in May, down 4.6 percent from May 2010.
Distressed homes accounted for 31 percent of all sales in May, which was down 37 percent from April, and was the same amount as a year ago. All cash transactions accounted for 30 percent of the sales in May, down from 31 percent in April, but up from 25 percent in May 2010.
Regionally, existing home sales in the Northeast declined 2.5 percent to an annual level of 770,000 in May and are 13.5 percent below May 2010 and in the Midwest existing home sales dropped 6.4 percent in May to a pace of 1.02 million and are 22.7 percent below a year ago.
In the South, existing home sales fell 5.1 percent to an annual level of 1.85 million in May and are 14.4 percent below May 2010 and in the West existing home sales were unchanged at an annual pace of 1.17 million in May but are 10.0 percent lower than a year ago.
The median price in the Northeast was $241,500, up 6.1 percent from a year ago and in the Midwest the median price was $136,400, which is 8.5 percent below May 2010.
The median price in the South was $149,200, down 3.1 percent from a year ago and in the West the median price was $192,300, which is 12.6 percent below May 2010.
Tags: NAR, existing home sales, underperforming market, affordable conditions, low mortgage rates, declining prices, low appraisals, cancelled contracts, median home price