Economy Watch: Existing Home Sales Spike
- Jun 21, 2013
Total existing-home sales rose 4.2 percent to an annualized rate of 5.18 million units in May from 4.97 million in April, and are 12.9 percent above the 4.59 million-unit pace in May 2012, according to the National Association of Realtors on Thursday. The organization counts in its totals every sort of U.S. residential property to tabulate sales, including single-family homes, townhomes, condominiums and co-ops.
Forty-five percent of all homes sold in May were on the market for less than a month, according to NAR. The median time on the market is the shortest since monthly tracking began in May 2011, though a separate NAR survey of homebuyers and sellers shows the shortest selling time was four weeks in both 2004 and 2005.
First-time buyers accounted for 28 percent of purchases in May, compared with 29 percent in April and 34 percent in May 2012. Distressed properties—foreclosures and short sales—accounted for 18 percent of May sales, unchanged from April, but matching the lowest share since monthly tracking began in October 2008. Distressed sales were 25 percent in May 2012.
The number of homes for sale, however, is dwindling. NAR reports that total housing inventory at the end of May was 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.
“The housing numbers are overwhelmingly positive,” NAR chief economist Lawrence Yun noted in a press statement. “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. Home price growth is too fast, and only additional supply from new homebuilding can moderate future price growth.”
FOMC comments continue to roil markets
Wall Street continued on a post-FOMC meeting trajectory on Thursday: that is, the equities markets kept dropping. The Dow Jones Industrial Average lost 353.87 points, or 2.34 percent, while the S&P 500 and the Nasdaq were down 2.5 percent and 2.28 percent, respectively.
But the impact of Fed Chairman Ben Bernanke’s unusually straightforward prediction that QE3 would wind down next year affected more than just North American markets. European stock exchanges also dropped, with the French and German exchanges off about 3 percent each, the Japanese Nikkei down 1.75 percent, and markets in Hong Kong and South Korea lost ground as well.
The yields on most countries’ sovereign debt jumped after the chairman’s suggestion that the Fed’s stimulus would be “tapering” in the near future—including the yield on U.S. Treasures, but more ominously on debt issued by the likes of Italy, Spain and Greece. The price of gold dropped below the $1,300 per troy ounce for the first time since September 2010. Only the U.S. dollar seemed to be doing well post-FOMC, gaining ground against most other major currencies on Thursday.
But things are a little more complicated than investor panic. Some of the declines, especially on Asian markets, were also because of weak data from the Chinese economy. Also in the mix—at least on American exchanges—was a weaker-than-expected weekly labor report. The U.S. Department of Labor reported on Thursday that for the week ending June 15, the initial unemployment claims were 354,000, an increase of 18,000 from the previous week’s revised figure of 336,000, which was one of the lowest totals in some years. The less flighty four-week moving average was 348,250, an increase of 2,500 from the previous week.