In what could be exciting news for both loan originators and contract mortgage processing companies, there are reports that existing home sales rose for the second-straight month in May —
climbing to their strongest pace since fall — as more homes on the
market helped draw buyers.
Sales of single-family homes,
townhomes, condos and co-ops hit a seasonally adjusted annual rate of
4.89 million, up 4.9% from April's revised 4.66 million rate, the
National Association of Realtors said Monday. The monthly
percentage gain was the highest since August 2011. Last month's sales
rate also beat economists' median forecast of 4.73 million in Action
Economics' survey.
"The long-awaited spring bounce in home sales
looks to have finally appeared," said RBS Markets chief U.S. economist
Michelle Girard in a research note.
Both sale prices and inventory improved last month, which is a good sign, said Stephanie Karol, of IHS Global Insight.
"As
long as sellers feel assured of making a profit, they will feel
emboldened to list their homes; and as buyers feel they have a good
selection of well-located properties to choose from, they will continue
to look and bid," she said in a research note.
Despite sales'
improving trend the past two months, they are still weaker than last
year. In May 2013, the annualized sales rate was 5.15 million.Through
May, sales are down 8.2% from the first five months of last year.
The
market also continues to be difficult for buyers with modest financial
resources, such as first-time buyers. Their share of sales declined to
27% in May, down 2 percentage points from April and from April 2013.
Although single-family home sales rose 5.7% from April, they're also down 5.7% from a year ago.
Compared
with last year, the lower-priced end of the market looks weakest. Sales
of homes under $100,000 and from $100,000 to $250,000 fell in every
region of the country last month compared with May 2013. But sales of
homes priced at $1 million and above rose everywhere but the Midwest.
The median existing home price was $213,400 in May, up 5.1% from a year earlier.
Still,
more homes on the market, prices that are rising more slowly than in
2013 and recent declines in mortgage rates should create better
conditions for more buyers, said Lawrence Yun, chief economist of the
National Association of Realtors.
Freddie Mac reported last week
that the U.S. average for a 30-year mortgage was 4.17%. That compares
with an average 4.48% last December and 3.93% a year ago.
This
year's declines in interest rates are likely to be temporary. Rates are
expected to tick up as the Federal Reserve pares the monthly bond
purchases it launched in 2012 to hold down long-term interest rates.
The
Realtors group said total housing inventory at the end of May rose 2.2%
to 2.28 million existing homes available for sale. That's 6% higher
than a year ago.
At May's sales rate, there's a 5.6-month supply
of homes for sale, which is still below the 6-month inventory that's
considered a balanced market between buyers and sellers.
More data
on the housing market is due Tuesday when Standard & Poor's
releases the Case-Shiller Index of home prices for April, and the
government reports on new home sales for May.
Any positive news is always welcomed by LO's and mortgage processing companies - like Peoples Privo Processing (www.peoplesprocessing.com).
