National average mortgage rates declined again from the previous week to a new all-time low of 4.58% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on July 1st. This is the second straight week that rates have declined and also the second straight week that the 30-year fixed rate mortgage hit new all-time lows. Falling stock prices have caused a “flight to safety” in Treasury bonds which helped push mortgage rates to new record lows.
Home sales in both the new and existing home markets posted declines in May as the expiration of the federal homebuyer tax credit at the end of April caused a significant drop in demand.
New home sales plunged 32.7% in May to a seasonally-adjusted annual pace of 300,000 units. New home sales are now at their slowest annual pace on record. New home sales for the previous three months were also revised lower by 99,000 units. New home sales experienced a surge in activity in the past couple of months because of the federal homebuyer tax credit but fell off precipitously in May following its expiration.
Median new home prices in May declined slightly to $200,900 from an upwardly revised price of $202,900 in April. Prices are down 1.0% from the previous month and are 9.6% lower than they were this time last year. Median new home prices are now at their lowest levels since December 2003.
In May, new home inventories declined from the previous month to 213,000 units on a non-seasonally adjusted basis. New home inventory has now recorded 33 straight months of declines and has not recorded a monthly increase in inventory levels since May 2007. Seasonally-adjusted inventory of unsold homes also declined in May to 213,000 units.
New home inventory levels are currently sitting at new all-time lows. However, months of inventory jumped last month due to a significant drop in sales activity. Seasonally-adjusted months of inventory jumped to 8.5 months in May from 5.8 months in April. Months of inventory are now back to its highest levels since June of last year.
Existing home sales eased 2.2% from April levels to 5,660,000 units. Existing single-family home sales declined 1.6% from last month to 4,980,000 units while existing condo and co-op sales fell 6.8% from April levels to 680,000 units. Existing home sales are still up 19.2% from the same year-ago period and have now recorded year-over-year increases in 11 consecutive months.
Median existing home prices in May increased again to their highest level since July 2009. The median sales price for an existing home increased to $179,600 from a revised $172,300 in April. Median existing home prices are up 2.75% from May of last year. This is the second straight month that existing home prices have recorded a year-over-year increase.
Existing home inventory dropped in May following the expiration of the federal homebuyer tax credit which helped boost sales and reduce the supply of existing homes on the market. Existing home inventory declined 3.4% from the previous month to 3,892,000 units. This was the first time in four months that existing home inventory posted a monthly decline. Existing home inventory levels are still 1.1% higher than they were this time last year