The data is distorted due to the “seasonally adjusted annualized rate” calculation. In theory, existing home sales should be higher than May last year because, with lower interest rates (manipulated by the Fed) and easier access to Government subsidized mortgages (FNM, FRE, FHA, VHA, USDA), the monetary and fiscal policy implementors running the U.S. have made it as easy for someone to buy a home now as it was during the big bubble. I would argue that the “increase” in reported home sales is fully attributable to “seasonal adjustments” which become exaggerated when the number is converted into an annualized rate.
It’s happening here too, NE Florida. Lots of inventory in higher priced areas (around $400k), lesser expensive areas are selling but at much reduced frequency. Lots of for sale signs out there and they’ve not come down. I see price reductions now, and still no traffic for sales. It looks exactly what I witnessed 7 years ago! – reader comment – note: a colleague of mine who lives on west coast of FLA said the same thing about his area
While the NAR was pleased to report a gain in May over April for its statistically brewed annualized home sales rate for May, it also revised lower its original “guesstimate” for April sales. In other words, existing home sales are occurring at a slower rate than originally reported. I would bet that in July when June’s number is reported that the NAR will revise lower May’s report.
Interestingly, the first-time buyer segment of the market took big dip from April. I have suspected based on my observations of the Denver market that the largest component of homebuyers are investor/flippers. The data confirm this. First time buyers were said to be 30% of the buyers in May, down from 32% in April. Historically, first-time buyers are typically 40-50% of the buying.
Also interestingly, the inventory of homes increased. I would suggest, based in inferences from the data, this is flippers/investors listing their homes. I have noticed recently signs posted on busy boulevards around Denver that say “Wholesale fix-up homes available.” This suggests to me that “investors” are scooping up homes ahead of flippers and looking to flip them into flippers. This is how the peak of the bubble in 2006-2008 looked.
Finally, and perhaps most disconcerting, is the fact that the NAR is now pushing policy proposals which would make it easier for student loan borrowers to take down a Government-sponsored mortgage to buy a home. Nothing like piling more Taxpayer funded mortgage debt on top of an unmanageable amount of taxpayer funded student loan debt in order to let newly minted college-degree’d bartenders and waitresses buy a home…