Strong May showing for housing market
ST. JOSEPH — “May overall was a very positive month for the housing market. The number of houses sold and closed and the selling prices were up substantially over last year. And May 2012 was up significantly over May 2011. The number of houses sold in May crossed the 300 mark. Since 2005, we have had only 10 other months reach this achievement,” stated Gary Walter, EVP, of the Southwestern Michigan Association of REALTORS®, Inc.
“Across the board, we are seeing more solid numbers this year including lower numbers of foreclosures as a percentage of all transactions. Mortgage rates were lower in May than rates were in the previous two years. What could temper this good housing market environment would be mortgage interest rates climbing up from the historical low rates that we have now,” Walter continued.
In May, 314 houses were sold compared to 287 in May 2012 which was a 9 percent increase and a 35 percent increase over April this year. In fact, this is the highest number of houses sold in the month of May since 2006, the peak year for the local housing market, when 328 houses were sold.
The average selling price in May increased 6 percent to $169,352 compared to $159,051 in May 2012. The median selling price jumped 11 percent from $117,500 a year ago to $130,000 this year.
Year-to-date, the number of houses sold have only increased by 3 houses while the average and median selling prices have climbed by double digit percentages. The year-to-date average selling price was up 12 percent at $165,837 compared to $147,584 in May 2012. The year-to-date median selling price rose 24 percent from $88,000 in May 2012 to $109,000 this May.
The median price is the price at which 50% of the homes sold were above that price and 50% were below.
Nationally, existing-home sales improved in May and remain solidly above a year ago, while the median price continued to rise by double-digit rates from a year earlier, according to the National Association of Realtors®.
Total existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops rose 4.2 percent to a seasonally adjusted annual rate of 5.18 million in May from 4.97 million in April, and is 12.9 percent above the 4.59 million-unit pace in May 2012.
Lawrence Yun, NAR chief economist, said the recovery is strengthening and to expect limited housing supplies for the balance of the year in much of the country. “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 percent,” he said. “The home price growth is too fast, and only additional supply from new homebuilding can moderate future price growth.”
Existing-home sales are at the highest level since November 2009 when the market jumped to 5.44 million as buyers took advantage of tax stimulus. Sales have stayed above year-ago levels for 23 months, while the national median price shows 15 consecutive months of year-over-year increases.
The national median existing-home price for all housing types was $208,000 in May, up 15.4 percent from May 2012. This marks six straight months of double-digit increases and is the strongest price gain since October 2005, which jumped a record 16.6 percent from a year earlier. The last time there were 15 consecutive months of year-over-year price increases was from March 2005 to May 2006.
Regionally, existing-home sales in the Midwest jumped 8.0 percent in May to a pace of 1.21 million, and are 16.3 percent higher than a year ago. The median price in the Midwest was $159,800, up 8.2 percent from May 2012.
First-time buyers accounted for 28 percent of purchases in May, compared with 29 percent in April and 34 percent in May 2012.
All-cash sales were at 33 percent of transactions in May, up from 32 percent in April and 28 percent in May 2012. Individual investors, who account for many cash sales, purchased 18 percent of homes in May; they were 19 percent in April and 17 percent in May 2012.
NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., said market conditions today are vastly different than during the housing boom. “The boom period was marked by easy credit and overbuilding, but today we have tight mortgage credit and widespread shortages of homes for sale,” he said.
“The issue now is pent-up demand and strong growth in the number of households, with buyer traffic 29 percent above a year ago, coinciding with several years of inadequate housing construction. These conditions are contributing to sustainable price growth,” Thomas said.
In Southwestern Michigan, the number of banked owned or foreclosed houses as a percentage of all transactions remained low at 24 percent. The lowest percentage for the year was 23 percent in April and the highest percentage was 34 percent in February.
“Locally, on May 31st, we had 2882 houses listed for sale, which was just a 3 percent decline from a year ago. At this inventory level, based on the last 12-months’ sales, we had a 12.1-months supply of homes for sale. Last year in May the inventory was at a 13.8-months supply and in 2011 was at 16.9-months supply,” stated Walter.
Nationally, the total housing inventory for all housing types at the end May rose 3.3 percent to 2.22 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace, down from 5.2 months in April. Listed inventory is 10.1 percent below a year ago, when there was a 6.5-month supply.
Locally, the mortgage rate rose to 3.69 in May from 3.56 in April. A year ago in May, the mortgage rate was 3.92 and in 2011 was 4.82.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional fixed rate mortgage rose to 3.54 percent in May from 3.45 percent in April; it was 3.80 percent in May 2012
The numbers reported for local sales include residential property in Berrien, and the western half of Van Buren and Cass counties. All three counties are included in numbers and percentages and do not reflect differences in any individual areas.
The Southwestern Michigan Association of REALTORS®, Inc. is a professional trade association for real estate licensees and ancillary service providers for the real estate industry in Van Buren, Berrien and Cass counties. The Association is located at 3123 Lake Shore Drive St. Joseph, MI 49085, (269) 983.6375. They can also be contacted through their web site, www.swmar.com.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.2 million members involved in all aspects of the residential and commercial real estate industries.