In a continuing downtrend, May’s pending home sales slid, declining 0.5 percent for the fifth month in a row (year-over-year), according to the National Association of REALTORS® (NAR) Pending Home Sales Index (PHSI).

Despite gains in three of the four major regions in the U.S., a considerable drop in the South tamped down the total. Activity increased 2.9 percent in the Midwest, 2 percent in the Northeast and 0.6 percent in the West, but slumped 3.5 percent in the South.

“Pending home sales underperformed once again in May, declining for the second straight month and coming in at the second-lowest level over the past year,” says Lawrence Yun, chief economist at NAR. “REALTORS® in most of the country continue to describe their markets as highly competitive and fast-moving, but without enough new and existing inventory for sale, activity has essentially stalled.

“With the cost of buying a home getting more expensive, it’s clear the summer months will be a true test for the housing market,” Yun says. “One encouraging sign has been the increase in new-home construction to a 10-year high. Several would-be buyers this spring were kept out of the market because of supply and affordability constraints. The healthy economy and job market should keep many of them actively looking to buy, and any rise in inventory would certainly help them find a home.”

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Existing-home sales in May were snagged by supply, the National Association of REALTORS® (NAR) reports. Activity in May declined 0.4 percent to 5.43 million, down 3 percent from the prior year. Inventory increased 2.8 percent to 1.85 million, but was 6.1 percent lower than the prior year.

“Closings were down in a majority of the country last month and declined on an annual basis in each major region,” says Lawrence Yun, chief economist at NAR. “Incredibly low supply continues to be the primary impediment to more sales, but there’s no question the combination of higher prices and mortgage rates are pinching the budgets of prospective buyers, and ultimately keeping some from reaching the market.”  

Currently, inventory is at a 4.1-month supply. In May, existing homes averaged 26 days on market, one day less than the prior year. All told, 58 percent of homes sold were on the market for less than one month. “Inventory coming onto the market during this year’s spring buying season—as evidenced again by last month’s weak reading—was not even close to being enough to satisfy demand,” Yun says. “That is why home prices keep outpacing incomes and listings are going under contract in less than a month—and much faster—in many parts of the country.” “REALTORS® in many parts of the country say their seller clients are dealing with a seesaw of emotions when deciding to put their home on the market,” says NAR President Elizabeth Mendenhall. “While they’re thrilled that they will immediately find multiple buyers interested in their listing, many fear they’ll have extreme difficulty finding another home to buy. Some have even decided to hold off until inventory conditions start improving, which is actually only exacerbating supply shortages.”

In May, the metropolitan areas with the fewest days on market and most® views, according to’s Market Hotness Index, were Midland, Texas; Boston-Cambridge-Newton, Mass.; San Francisco-Oakland-Hayward, Calif.; Columbus, Ohio; and Vallejo-Fairfield, Calif. The median existing-home price for all house types (single-family, condo, co-op and townhome) was $264,800, a 4.9 percent increase from the prior year. The median price of an existing single-family home was $267,500, while the median price for an existing condo was $244,100.

Existing-home sales in the single-family space came in at 4.81 million in May, a 0.6 percent decrease from the 4.84 million in April, and a 3 percent decrease from the 4.96 million the prior year. Existing-condo and -co-op sales came in at 620,000, a 1.6 percent increase from April, but a 3.1 percent decrease from the prior year. Twenty-one percent of existing-home sales in May were all-cash, with 15 percent by institutional investors. Three percent were distressed.

Only one of the four major regions in the U.S. experienced higher sales: the Northeast, increasing 4.6 percent to 680,000, at a median $275,900. The other three saw lower sales, slipping 2.3 percent in the Midwest to 1.26 million, at a median $209,900; 0.4 percent in the South to 2.32 million, at a median $233,100; and 0.8 percent in the West to 1.17 million, at a median $395,800.

Additionally, first-time homebuyers comprised 31 percent of existing-home sales, down from 33 percent in April. “The abrupt hike in mortgage rates this spring, along with price appreciation and competition being the strongest in the entry-level part of the market, is why first-time buyers are not as active as they should be and their participation remains below its historical average,” says Yun.

Source: NAR

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The U.S. created a robust 223,000 new jobs in May to push unemployment down to an 18-year low of 3.8%, signaling that economic expansion still has plenty of steam.  

The increase in hiring — the biggest in three months — exceeded the 190,000 forecast of economists polled by MarketWatch.

By and large, the reported showed an economy with plenty of vigor. Most industries added jobs and worker pay increased at a somewhat faster pace.

The unemployment rate fell again to the lowest level since April 2000 as more people found work. The last time the jobless rate was even lower was in 1969.

What happened: Retailers led the way in hiring by adding 31,000 new jobs. Health-care companies boosted payrolls by 29,000, construction firms took on 25,000 workers and manufacturers increased employment by 18,000.

Steady hiring by construction and manufacturing companies is particularly surprising. They are the among the industries that have complained the loudest about a shortage of skilled workers. Record job openings, an uber-tight labor market and growing complaints about a labor shortage still aren’t leading to big pay raises most employees, but wages are rising gradually.

Hourly pay rose by 8 cents, or 0.3% to $28.92 an hour in May. As a result, the 12-month increase in wages rose to 2.7% after holding at 2.6% for three months in a row.

Employment gains for April and March were revised up by a combined 15,000, the Labor Department said Friday. The government said 159,000 new jobs were created in April instead of 164,000. March’s increase was raised to 155,000 from 135,000. SOURCE: MarketWatch

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