May Existing Home Sales: A Measurement from a Different Time

• May existing home sales were down 9.7% from April and 26.6% from a year ago, to 3.91 million sales (SAAR), according to the National Association of Realtors.
• The median existing-home price for all housing types in May was $284,600, up 2.3% from May 2019 but down 0.7% from April.
• Total housing inventory at the end of May totaled 1.55 million units, up 6.2% from April and down 18.8% from one year ago.

After falling precipitously at the beginning of the pandemic, the housing market has improved markedly in recent weeks -- though those gains have yet to show up in home sales. Because sales are captured when the deal closes not when the contract is signed, existing home sales data actually capture buyer behavior from one or even two months prior to the month noted in the release. So today’s reading is measuring activity from a time when most businesses were still shuttered and people were just coming to terms with how their lives would be altered by pandemic. But despite the sharp decline from an already sobering April release, the outlook for the housing market appears relatively rosy heading into the summer months. Pending sales are primed to pick up as low mortgage rates, a gradually opening economy and innovative techniques being employed by real estate professionals keep buyers engaged and eager to enter the market. The small monthly decline in prices is notable and worth watching going forward -- prices have never fallen in May from April in the history of the series. Low inventory had been keeping upward pressure on prices, but it now seems buyers may be finding more room to negotiate and/or that more-expensive homes are lingering longer on the market. But nevertheless, look for home sales to begin their recovery beginning in next month’s release.