May existing home sales nationally rose 4.2% in May from April of this year and 12.9% above sales in May of 2012.
Laurence Yun, National Association of Realtors chief economist said 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 said. “The home price growth is too fast, and only additional supply from new homebuilding can moderate future price growth.”
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.
Maine’s May home sales increase outpaced the national increase to 18% with 2334 homes sold.
Increasing home mortgage interest rates may have fueled this increase in home purchases where homebuyers feared near term further increases. With rates increasing nearly one point to around 4.6% homebuyers will need higher incomes to qualify for the same priced home. The one percent increase on a $200,000 mortgage will ad nearly $1390 to annual carrying costs and require buyers to have an additional $5500 in annual income to qualify for the same loan at the lower rates.