Despite some amazing numbers in recent months, May has proven that not every month can be a record-setter in the local housing market. Southwestern Michigan Association of Realtors Executive Alan Jeffries says, “While the housing market in April shattered all records, May missed one.”
Jeffries tells us, “The number of houses sold in May was down 4-percent from May 2016, which boils down to sixteen fewer homes were sold.” In spite of that skip in the step, the smaller sales volume still resulted in records for total dollar volume and average and median selling prices in May in our comparison going back to 2006.”
Jeffries attributes the slowdown to the ongoing issue of inventory saying, “When you consider that the housing inventory dropped 14-percent from May 2016, it signals that buyers are still anxious to purchase a home and are competitive about it.” He points out that at the end of May, there were 1,956 houses for sale compared to 2,283 houses in May 2016. At that level, the market had just 6.5-months supply of houses for sale going into the peak selling season. For comparison, in May 2010 the inventory was at 3,602 houses for sale which was 16.4-months supply.
The number of houses sold in May 2017 decreased to 341 from 357 in May 2016 for a 4-percent decline. Year-to-date, the number of houses sold was up by 5-percent over May 2016 (1,306 vs. 1,247).
The total dollar volume for May increased 3-percent over May 2016 ($76,453,730 vs. $74,118,426). Year-to-date, the total dollar volume was up 15-percent ($267,962,250 vs. $232,200,970).
The average selling price in May 2017 increased 8-percent from May 2016 ($224, 204 vs. $207,614). The year-to-date, average selling price was up 10-percent ($205,177 vs. $186,207).
The median selling price of $165,000 in May 2017 soared 22-percent over the $135,000 set in May 2016. Year-to-date the median selling price jumped 12-percent to $145,000 from $130,000 in 2016.
The median price is the price at which 50% of the homes sold were above that price and 50% were below.
At 6-percent, a new record was set for the number of bank-owned or foreclosed homes as a percentage of all transactions in May 2017. The previous lowest percentage was 8-percent in October 2016. In May 2009 and 2011, the percentage was 34-percent.
Locally, the mortgage rate dropped slightly to 4.129 from 4.365-percent in April. Last year in May, the rate was 3.73. Nationally, the Freddie Mac mortgage rate in May was 3.94 compared to 4.03-percent in April for a 30-year conventional mortgage.
According to the National Association of Realtors, existing-home sales on the national scale rebounded in May following a notable decline in April, and low inventory levels helped propel the median sales price to a new high while pushing down the median days a home is on the market to a new low. All major regions except for the Midwest saw an increase in sales last month.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, climbed 1.1-percent to a seasonally adjusted annual rate of 5.62 million in May from a downwardly revised 5.56 million in April. Last month’s sales pace is 2.7-percent above a year ago and is the third highest over the past year.
Lawrence Yun is Chief Economist for the National Association of Realtors. He says sales activity expanded in May as more buyers overcame the increasingly challenging market conditions prevalent in many areas. He notes, “The job market in most of the country is healthy and the recent downward trend in mortgage rates continues to keep buyer interest at a robust level.” He adds, “Those able to close on a home last month are probably feeling both happy and relieved. Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace and the prevalence of multiple offers in some markets are pushing prices higher.”
The median existing-home price for all housing types in May was $252,800. This surpasses last June ($247,600) as the new peak median sales price, is up 5.8-percent from May 2016 ($238,900) and marks the 63rd straight month of year-over-year gains.
Regionally, existing-home sales in the Midwest sales fell 5.9-percent to an annual rate of 1.28 million in May, and are 0.8-percent below a year ago. The median price in the Midwest was $203,900, up 7.3-percent from a year ago.
First-time buyers were 33-percent of sales in May, which is down from 34-percent in April but up from 30-percent a year ago. NAR’s 2016 Profile of Home Buyers and Sellers revealed that the annual share of first-time buyers was 35-percent.
All-cash sales were 22-percent of transactions in May, up from 21-percent in April and unchanged from a year ago. Individual investors, who account for many cash sales, purchased 16-percent of homes in May, up from 15-percent in April and 13-percent a year ago. Sixty-four percent of investors paid in cash in May.
Nationally, the total housing inventory at the end of May rose 2.1-percent to 1.96 million existing homes available for sale, but is still 8.4-percent lower than a year ago (2.14 million) and has fallen year-over-year for 24 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, which is down from 4.7 months a year ago.
Yun says, “Home prices keep chugging along at a pace that is not sustainable in the long run.”He notes, “Current demand levels indicate sales should be stronger, but it’s clear some would-be buyers are having to delay or postpone their home search because low supply is leading to worsening affordability conditions.”
Yun also tells us, “With new and existing supply failing to catch up with demand, several markets this summer will continue to see homes going under contract at this remarkably fast pace of under a month.”
The numbers reported for local sales include residential property in Berrien, Cass and the westerly 2/3 of Van Buren counties and should not be used to determine the market value of any individual property. If you want to know the market value of your property, please contact your local Realtor.
