Home sales are on their way up; Existing-home sales improved in May and remain solidly above a year ago, while the median price continued to rise by double-digit rates from a year earlier, according to the National Association of Realtors®.
Lawrence Yun, NAR chief economist, says the recovery is strengthening and to expect limited housing supplies for the balance of the year in much of the country. “The housing numbers are overwhelmingly positive. However, the number of available homes is unlikely to grow, despite a nice gain in May, unless new home construction ramps up quickly by an additional 50 percent,” he says. “The home price growth is too fast, and only additional supply from new homebuilding can moderate future price growth.”
Total housing inventory at the end of May rose 3.3 percent to 2.22 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace, down from 5.2 months in April. Listed inventory is 10.1 percent below a year ago, when there was a 6.5-month supply.
The national median existing-home price for all housing types was $208,000 in May, up 15.4 percent from May 2012. This marks six straight months of double-digit increases and is the strongest price gain since October 2005, which jumped a record 16.6 percent from a year earlier. The last time there were 15 consecutive months of year-over-year price increases was from March 2005 to May 2006.
Forty-five percent of all homes sold in May were on the market for less than a month. The median time on the market is the shortest since monthly tracking began in May 2011; on an annual basis, a separate NAR survey of home buyers and sellers shows the shortest selling time was 4 weeks in both 2004 and 2005.
First-time buyers accounted for 28 percent of purchases in May, compared with 29 percent in April and 34 percent in May 2012.
All-cash sales were at 33 percent of transactions in May, up from 32 percent in April and 28 percent in May 2012. Individual investors, who account for many cash sales, purchased 18 percent of homes in May; they were 19 percent in April and 17 percent in May 2012.
NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., says market conditions today are vastly different than during the housing boom. “The boom period was marked by easy credit and overbuilding, but today we have tight mortgage credit and widespread shortages of homes for sale,” he said.
“The issue now is pent-up demand and strong growth in the number of households, with buyer traffic 29 percent above a year ago, coinciding with several years of inadequate housing construction. These conditions are contributing to sustainable price growth,” Thomas said.
With buyer traffic increasing, and prices on the rise, how can you make sure you’re getting in the game? Below are a few tips for working with buyers and sellers in this market:
1. Be sure to connect on multiple platforms – have a winning website, social media plan, and lead generation strategy.
2. Be upfront and set their expectations right from the start. Tell buyers they have to act fast, and prep sellers for multiple offer scenarios.
3.Take time to truly understand their needs and wants. This will help find a home—or a buyer for their home—faster.
4.Stay connected. Today’s buyers and sellers expect to be able to reach their agent at any time.
5.Think outside the box. Buyers are getting more creative—and more personal—when it comes to appealing to sellers. Writing personal letters to sellers are just one of the ways many buyers are making connections and seeing success.