As reopenings across the nation continue, one market is experiencing something of a surge which, given the circumstances, is rather unexpected—even by experts. The month of May saw home sales up by almost 17%. With the nation still in the process of a slow and steady recovery, the fact that home sales were so robust last month was quite a shock. Some suggest that it is the feeling of hopefulness many are experiencing now that reopening is taking place that ultimately led to so much real estate activity.
According to statistics released by the Commerce Department earlier this week, the sales of new single-family homes rose to just under 700k thousand last month. Again, these numbers are encouraging especially given the situation that the country is currently in. Several prominent economists predicted the opposite. Because of the slower-to-open stance taken by quite a few states, they were forecasting a housing downturn for May.
That said, it wasn't all positive news on the housing front for May. The sales of existing homes did plunge. The existing home sale rate fell to 3.9 million which represents the slowest pace of such sales the US has seen in over ten years.
Overall, experts are optimistic though that these solid numbers demonstrate the fact that the economy seems to be on the right path. During March and April, real estate activity slowed down immensely. However, to see it rise so sharply in May is most definitely a good sign. The main hindrance moving forward, according to some, is going to be the unemployment rate. With millions still out of work, this could ultimately lead to a reversal of May's numbers in the summer months. Many are saying that over the long term 2020 is likely going to see a decline in home sales with some bright spots along the way such as we saw during May.
One economist was recently quoted as saying: "The slow recovery in the labor market will limit the upside of any rebound in the housing market." Still, May's numbers were nearly thirteen percent higher than they were last year. Plus, median sale prices rose by 4.9% after having tumbled by almost nine percent in April—largely because builders were discounting home prices at that time. Many of course are hoping that the trend continues as signs do seem to be pointing in a positive direction in terms of housing, at least for right now.
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