The housing market has resumed its strongest growth in years, according to industry data released Monday, pointing to a continuing tough market for home buyers looking for a deal.
Sales of previously owned homes rose 9.2 percent in May compared with the same period last year, according to the National Association of Realtors. Sales rose 5.1 percent compared with April to a 5.35 million annualized rate, the highest level since 2009.
“We’re talking about the best numbers in years,” said Mike Larson, a housing analyst with Weiss Research.
The rebound means prices for homes continue to be on the rise, though still nowhere near their perch before the housing bubble burst in the mid-2000s. That’s a positive sign for builders, lenders and sellers, but not buyers, whose wages have generally stayed the same even as home prices increased.
“I think as you do see standards start to loosen up and lenders are a little more forgiving and the job market doing better,” Larson said, “this is a recipe for momentum in the housing market.”
And that’s a marked shift from where the housing market stood five years ago, when homes lost to foreclosure flooded the market and banks were wary of making loans as the economy continued to lick its wounds.
Not any longer.
As the economy continues to improve, banks have begun to make it easier to secure a mortgage, analysts said. Potential buyers are trying to jump in the market before interest rates increase. Federal Reserve Chair Janet Yellen hinted during last week’s policy meeting that the central bank was getting closer to gradually increasing interest rates.
The lone downside in this report, said Lawrence Yun, the NAR’s chief economist, is the supply of existing homes on the market. The housing inventory rose 1.8 percent compared with a year ago. But at the current sales pace, it would take only about five months to sell all of the homes on the market, still below average.
That is, once again, bad for buyers. The relatively low supply of homes is helping push home prices higher. The median existing home price rose 7.9 percent to $228,700 compared with the same period last year.
Put all that together, and it’s a good time to sell, analysts say. Demand, especially among first-time buyers, is high and supply is, well, not.
“The winners are homeowners who can sell at a higher price,” Yun said.
“All the renters who are trying to save up for a down payment, but the home prices seem to be outpacing their savings rate,” he said.
And though single-family home sales continue to outpace every other type of sales, condominium sales are also steadily increasing. That’s thanks to first-time buyers, Larson said.
Someone’s first home isn’t likely to be a five-bedroom mansion in the suburbs. It will probably be something a little more modest, like a condo or townhouse, which are cheaper. Plus, there’s about just as much inventory for condos as there is for single-family homes.
“People are saying they desire the community, the walk-ability of city living and they’re willing to give up the size of a single-family home,” Yun said. “It is cheaper, and people want to get on that ladder of home ownership.”