Ten-X, the real estate transaction marketplace and parent of auction.com, projects continued growth in existing home sales for May. According to the Ten-X Residential Real Estate Nowcast, May existing home sales will fall between seasonally adjusted annual rates of 5.47 and 5.83 million, with a targeted number of 5.65 million – a 3.7% increase from April and a 6.2% year-over-year gain.
"Though ongoing issues with affordability and low inventory continue to hold back stronger sales growth, the recent increase in home sales is encouraging and indicative of a solid U.S. housing market supported by positive underlying fundamentals," said Ten-X Chief Economist Peter Muoio. "A strong labor market is adding a solid number of jobs, unemployment remains low despite a rising labor force, wage growth is starting to accelerate, lower energy prices are supporting consumer spending, and low mortgage rates are enticing for home buyers. Despite facing some broader economic headwinds, market demand remains healthy."
The National Association of Realtors® (NAR®) recently reported a 1.7% year-over-year increase in sales to 5.45 million units in April, rising from the upwardly revised 5.36 million rate in March. Last month's nowcast also called for an increase in April sales between 5.34 and 5.70 million units, with a target of 5.52.
The NAR also reported a 6.3% year-over-year increase in median existing home prices to $232,500 for April, marking the 50th consecutive month of year-over-year gains and falling within the range of $218,770 - $241,798 predicted by Ten-X in last month's nowcast. Findings from the Ten-X Residential Real Estate Nowcast suggest that sales prices for existing homes will fall between $226,497 and $250,339 in the month of May with a targeted price of $238,418, representing 2.5% month-over-month and 4.2% year-over-year gains.
"Home sales are extraordinarily strong, considering how low inventory levels are and how difficult it still is for many buyers to qualify for loans," said Ten-X Executive Vice President Rick Sharga. "One thing worth watching over the coming months is affordability. Home price appreciation continues to outpace wage growth in many markets, and we're seeing indications that this may be slowing down sales volume in some of the regions where home prices had been accelerating most rapidly."
The Ten-X Residential Real Estate Nowcast combines industry data, proprietary company transactional data and Google search activity to predict market trends as they are occurring. Building upon the groundbreaking work by Google Chief Economist Hal Varian, Ten-X's nowcast model extends a traditional autoregressive-forecasting model to incorporate contemporaneous information that provides significantly enhanced accuracy.