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July 2023 » thefivestar.com 73 J O U R N A L July 2023 MAY'S EXISTING- HOME SALES POST MINOR GAINS A n improvement is an improvement, no matter how small, and that is the case with May's existing-home sales numbers from the National Association of Realtors (NAR) as sales increased by 0.2% to a seasonally adjusted annual rate of 4.3 million units. However, May's gain is on a month-to- month basis—year-over-year existing-home sales are down by a massive 20.4%. Among the four major regions of the country, sales were mixed; the South and West posted improving numbers while the Northeast and Midwest reported sales declines. On a yearly basis, sales decreased in all four regions. According to the NAR, total exist- ing-home sales numbers include completed transactions for single-family homes, town- homes, condominiums, and co-ops. "Mortgage rates heavily influence the di- rection of home sales," NAR Chief Economist Lawrence Yun said. "Relatively steady rates have led to several consecutive months of consistent home sales." Total for-sale housing inventory at the end of May rose to 1.08 million units, or 3.8%, from April—but on a yearly basis, this number is down 6.1% from one year ago when inventory stood at 1.15 million units. At the current sales pace, that is a three-month supply, up from 2.9 months in April and 2.6 months year over year. "Available inventory strongly impacts home sales, too," Yun added. "Newly con- structed homes are selling at a pace remi- niscent of pre-pandemic times because of abundant inventory in that sector. However, existing-home sales activity is down sizably due to the current supply being roughly half the level of 2019." Looking nationally at the big picture, the median existing-home sales price for all types of housing declined 3.1% year over year from $408,600 in May 2022 to $396,100 this May. Prices grew in the Northeast and Midwest but fell in the South and West. The typical time a home remained on the market in May was 18 days, down from 22 days in April, but up from 16 days over the same period last year. Seventy-four percent of homes sold in May were on the market for less than a month. An important segment of the market, first-time buyers, were responsible for 28% of sales in May, down 1% from April, but up from 27% last year. All-cash sales accounted for 25% of transactions in May, down 3% from April; year over year this number was unchanged. Individual investors or second-home buyers, who make up many cash sales, pur- chased 15% of homes in May, down from 17% in April and 16% the previous year. Distressed sales—foreclosures and short sales—represented 2% of sales in May, virtually unchanged from last month and the prior year. Looking specifically at single-family and condo/co-op sales, this number dipped to a seasonally adjusted annual rate of 3.85 million in May, down 0.3% from April and 20% year over year. The median existing single-family home price was $401,100 in May, down 3.4% from May 2022. Condo and co-op sales posted a seasonally adjusted annual rate of 450,000 units in May, up 4.7% from last month, but down 23.7% year over year. The median existing condo price was $353,000 in May, nearly identical to the prior year ($353,100). "A temporary capital gains tax reduction on a sale of investment property can lead to a boost in housing inventory, home sales, and the economy," said NAR President Kenny Par- cell, a Realtor from Spanish Fork, Utah, and broker-owner of Equity Real Estate Utah. "Policymakers need to seriously consider the measure." Looking at the data on a regional basis according to the NAR: » Existing-home sales in the Northeast declined 2.0% from April to an annual rate of 500,000 in May, down 25.4% from May 2022. The median price in the Northeast was $439,000, up 2.5% from one year ago. » In the Midwest, existing-home sales faded 2.9% from one month ago to an annual rate of 990,000 in May, decreasing 20.8% from "Newly constructed homes are selling at a pace reminiscent of pre-pandemic times because of abundant inventory in that sector. However, existing- home sales activity is down sizably due to the current supply being roughly half the level of 2019." Lawrence Yun, Chief Economist, NAR