The median price of an older home in the United States exceeded $ 350,000 for the first time in May, as a shortage of single-family homes makes it a sellers’ market.
In the trade, this is called a “seller’s market”.
The average price of an older home in the United States topped $ 350,000 for the first time in May, up 23.6% from the previous year, the National Association of Realtors (NAR) announced on Tuesday. .
Every region of the country saw price increases for existing home sales last month, marking 111 consecutive months of year-over-year gains dating back to 2012.
Last month’s home price milestone was driven by a continued mismatch between supply and demand, and is symptomatic of rising wealth and income inequality as the country’s economy continues to heal from COVID hit from last year.
The market is full of house hunters who continued to work during the pandemic and saw their wealth increase thanks to a rising stock market, helping them to raise down payments. They also want to take advantage of historically low interest rates – designed to support the country’s labor market – to get good mortgage deals.
This has put sellers in the driver’s seat as eager homebuyers compete for what’s available. But this power imbalance has also held some potential buyers on the sidelines, waiting for some of the heat to emerge from the country’s scorching real estate market.
Sidelined homebuyers, combined with a shortage of inventory, explain why the number of existing homes sold fell 0.9% in May from April, marking the fourth consecutive month of decline. But compared to the same period a year ago, sales are up 44.6%.
“Home sales declined moderately in May and are now approaching pre-pandemic activity,” Lawrence Yun, chief economist of NAR said in a press release. “Lack of inventory continues to be the main factor holding back home sales, but declining affordability is simply excluding some first-time buyers from the market. “
First-time buyers made up 31% of existing home sales in May, while individual investors or second home buyers made up 17%.
In a signal that large institutional investors looking to appropriate properties and rent them at a profit are still active in the market – last month’s cash sales accounted for 23% of deals. This was down from 25 percent the month before, but up 17 percent from the same period a year ago.
The total housing stock at the end of May stood at 1.23 million units, up 7% from April’s stock but down 20.6% from the year previous.