The National Association of Realtors reports sales slumped 9.7% from April to a seasonally-adjusted annual rate of 3.91 million in May. Overall, sales fell year-over-year, down 26.6% from a year ago (5.33 million in May 2019).
Cheerleading by Yun
“Sales completed in May reflect contract signings in March and April – during the strictest times of the pandemic lockdown and hence the cyclical low point,” said Lawrence Yun, NAR’s chief economist. “Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year.”
- Northeast: May 2020 existing-home sales in the Northeast fell 13.0%, recording an annual rate of 470,000, a 29.9% decrease from a year ago. The median price in the Northeast was $327,900, up 7.8% from May 2019.
- West: Existing-home sales in the West fell 11.1% to an annual rate of 720,000 in May, a 35.1% decline from a year ago. The median price in the West was $408,400, down 0.2% from May 2019.
- South: Existing-home sales in the South dropped 8.0% to an annual rate of 1.73 million in May, down 25.1% from the same time one year ago. The median price in the South was $247,400, a 2.1% increase from a year ago.
- Midwest: Existing-home sales decreased 10.0% in the Midwest to an annual rate of 990,000 in May, down 20.2% from a year ago. The median price in the Midwest was $227,400, a 3.0% increase from May 2019.
Cyclical Low? But Then What?
It remains to be seen if housing declines again in June, but Yun is likely correct that May represents the bottom or close to it.
However, talk of a big blast higher based on the economy reopening is more than a bit questionable.
Are these People Buying a Home?
Questions for Lawrence Yun
- For two months, 30% (mostly renters) failed to make their housing payment. Are they potential buyers?
- Over 20 million people are recently out of a job. Are they potential buyers?
Diminishing Pool of Potential Buyers
1A: For details on point number 1, please see 30% Failed to Make Housing Payments in June
2A: For details on point number 2, please see Continuing Unemployment Claims Tell a Bleak Story.
Given the huge decrease in potential buyers it is more than a bit unreasonable for Yun to suggest positive year-over-year existing home sales any time soon.