As reported by the National Association of Realtors (NAR), the overall existing home sale transactions increased by 1.8% last month, which is a seasonally adjusted rate of 5.53 million per year.
These transactions include town homes, single-family homes, condominiums and co-ops.
Despite the fact that the existing home sales may have increased, the median home prices also skyrocketed at the highest level due to the high demand and lagging costs of homes.
In May, all regions witnessed solid sales increases except in the Midwest.
In line with the result in May. This rises from the 5.43 million in April. Following this increase, the sales has grown from the 5.29 million last year to 4.5%, which are the maximum pace they have reached since February 2007.
For people who are home buyers for the first time, they have some difficulties entering the market.
On the other hand, repeat home buyers make up the majority of home acquisitions now because they use the earnings from their previous home sale as down payment.
While home prices are high, they have not reached the pre-recession stages.
Experience indicates that home prices should be increasing twice over their existing rate of about 5% given the low levels of inventory.
There is a good balance between the demand and supply of housing, which is a favorable sign of prices in the future, causing price inflation within four months.
At the present time, the sign indicates that there is not as much supply on the market in less than five months, a year-on- year evaluation having to do with the 10% price growth.
The numbers of existing home sales in May indicate that high demand still consistently aiding a recovering housing industry, although the problems in inventory are hindering a total recovery to reach levels of pre-recession.
There are people who think that the rise in the existing home sales brings just a small amount of good news.
While it is good to see growth in the existing home sales for another month, the third time consecutively.
But aside from that, it promises consumers very little. Even with these progress, buyers will continue to have difficulties in finding a home that is reasonably priced.
Last June, median home prices boosted at $236,300, but went up by $239,700 in the month of May.
This is a 4.7% yearly increase in home prices, representing the increases of the 51st consecutive month of annual year-over-year analysis.
During the summer, the sales have the possibility to sustain their pace, preventing further lag in employment growth that could somehow counterbalance the demand from all of these repeat investors.
Despite the fact that the overall housing inventory from last month increased by 1.4% to 2.15 million existing home sales, it remains 5.7% low from last year.
The existing inventory continues to be subdued in most of the country and will continue to lag even with the inadequate amount of last year.
The new home construction this year has favorably rose higher, but there is an obvious need for a great deal more, in order to minimize the difficulties of supply that are limiting the options drastically.
For many of the prospective first-time home buyers, the prices becomes unattainable for them.
On the whole, it is good for the economy and for the employees. There is a backlog of home orders, which mean a lot of work coming down the pike of home construction in America.
This is an industry that is ruled by those working-age people who have been recently exhibiting poor work force involvement.
It is actually a good thing, considering that May’s employment report revealed continued slowness in home construction.
All the same, not all people think that insufficient supply is considered a serious concern for starter homes. In the majority of markets, not enough supply for starter homes contribute to prices going up.
But the latest report by Trulia stated that there are a number of exceptions to this principle.
Then again, most mortgage brokers expect to see the market share of the first-time buyers to improve, and the industry is responsible to make sure they are served well.
Also included in the report is the price of owning a home is undoubtedly the highest in the West, the place to find vast areas that are highly-priced such as San Francisco and Silicon Valley.
The region had a median home price of $346,900 in May, and the amount of sales went up by 0.9% to 114,000 year-over-year.
The Northeast was the next most expensive area at $268,600. In May, the place also experienced the lowest sales at 69,000. But a year earlier at the same time period, the number of existing home sales leapt at 11.3% .
The South followed the Northeast region, wherein the average home price was $211,500. This warm weather region experienced an 8.2% increase from last year at the highest sales of 211,000.
What causes it to happen?
This happens because building contractors need to have a cash flow. For them, an empty house is a cost,hence they prefer to make an agreement with home buyers rather than with the existing owners.
This basically controls the extent to which the hoe sellers can increase their selling prices despite having a short supply of their product.
To put it simply, new builders have more need to sell homes, as well as more freedom to stop a transaction at a lower cost.
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