June 21, 2012 at 10:40 AM ET
Sales of existing-homes fell 1.5 percent in May, according to a report Thursday by the National Association of Realtors, offering another realty reality check that the sweet sounds of any possible residential revival will contain sour notes.
Purchases of previously owned U.S. homes dipped to a seasonally adjusted annual rate of 4.55 million in May from 4.62 million in April. But sales posted a 9.6 percent increase last month compared to the 4.15 million-unit pace in May 2011.
While most housing analysts expected a small May skid, some real estate experts are convinced a few key ingredients, including tighter supplies, are present for a national – albeit slow – residential resurgence.
“The slight pullback in monthly home sales is more likely due to supply constraints rather than softening demand. The normal seasonal upturn in inventory did not occur this spring,” said Lawrence Yun, NAR chief economist. “Even with the monthly decline, home sales have moved markedly higher with 11 consecutive months of gains over the same month a year earlier.”
One buzzword being bandied about lately among many Realtors with equal parts hope and hate: inventory – and the lack thereof.
Nationally, total housing inventory at the end of May dropped 0.4 percent to 2.49 million existing homes available for sale, NAR reported. That represents a 6.6-month supply of available homes at the current sales pace. In April, there was a 6.5-month supply.
Listed inventory is 20.4 percent lower than it was one year ago at this time when a 9.1-month supply existed. Compare that to the peak of the market in July 2007 when unsold inventory hit a record of 4.04 million homes.
“Because new inventory is down year on year, that means there are fewer homes (for buyers) to choose from,” said Jed Kolko, the chief economist for Trulia. “That can hold back sales. You can’t sell homes that aren’t on the market.”
According to a survey released last week by Realtor.com, inventory of for-sale, single-family homes, condos and townhouses in 144 of the 146 markets surveyed dipped in May compared to the same month in 2011.
In Sacramento, existing inventory at the end of May was 1,413 single-family homes – as compared to 4,111 homes the same month last year – a 66 percent plunge, said Brian McMartin, a broker associate with Better Homes and Gardens Real Estate, Mason-McDuffie, in Sacramento.
That’s causing Sacramento agents and buyers to be frustrated because the demand to buy there is gaining energy.
"At that rate, we have less than a month of inventory left, assuming nothing else came on the market,” McMartin said. “Sales here are up but not exponentially. We have an inventory issue.
“We have buyers frustrated, getting out-bid left and right, making 5, 10, 20 offers, having to overbid.”
The inventory shortage apparently is helping drive prices, however, Yun said. The median price for a home resale rose to $182,600 in May, according to NAR. That's 7.9 percent higher than the same month one year ago - and the highest since June 2010.