According to Auction.com’s, LLC Real Estate Nowcast for May, despite an unexpected drop in April, existing-home sales in May are expected to pick up and fall between seasonally adjusted annual rates of 5.03 and 5.34 million annual sales, with a goal of 5.18 million. This is a 2.9 percent increase from April and a 5.8 percent increase from a year ago. Auction.com expects May sales to come in at 5.18 million units (SAAR), and median sales prices at $220,799.
The Nowcast predicts market trends as they are happening before actual findings are released using industry data, proprietary company transactional data, and Google search activity, the company says.
“Heading into the summer buying season, we’re expecting to see healthy increases in home sales activity – though those increases will likely occur at a more modest pace,” said Rick Sharga, EVP at Auction.com. “While the jump we saw in March somewhat made up for lackluster performance in January and February, tight inventories, strict lending standards, and diminished participation by investors remain significant obstacles for the market.”
Yesterday, the National Association of Realtors (NAR) reported that existing-home sales were at 5.04 million units, a 3.3 percent decrease from March, though up 6.1 percent from a year ago. Both, Auction.com and Consensus estimates were off for April because they predicted a stronger performance based on data released in March.
However, Auction.com’s estimate of $201,052 and $222,215 for existing-home prices in April was correct, according to the company. The NAR reported an increase in existing-home prices in April to $221,230, revealing an 8.9 percent increase compared to a year ago and marking a new high for home prices, which are now 2.6 percent below their pre-bust level.
“It's important to keep blips like the one we saw in March in context. We're in an unusually volatile period in the housing market, with almost unprecedented swings in sales volumes from month to month, Sharga said. “The bottom line is that in a truly healthy housing market, we'd already be on pace for 6 million existing home sales, but at this rate, I expect that the market will stay in the 5 million range for at least the remainder of the year.”
For May, the Nowcast suggests that existing-home sales prices will increase 4.2 percent year-over-year for the month, and will fall between $209,759 and $231,839, with a targeted price of $220,799.
“In our estimation, this burgeoning home price strength should help to boost sales out of their range, as a key constraint to sales at this time is the low level of inventory for sale,” said Peter Muoio, Auction.com chief economist. “Higher prices should entice more sellers into the market.”
According to the company, stronger owner-occupier demand is also needed to offset current subdued investor purchasing activity.
“The good news on that household formations have been following a much better path recently, following the Census Bureau’s massive revisions released last summer,” Muoio said. “The improving economy should generate continued healthy household formations and therefore stronger demand for homes down the road.”