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The National Association of Realtors reported that sales of existing homes fell -0.9% in May to a seasonally-adjusted annual rate of 5.80M, up 44.6% as compared to May 2020. This is the fourth consecutive month of decline. Sales of single-family homes fell to a 5.08M annual rate (+39.2%Y/Y) while existing condo sales remained at a 720K annual rate (+100% Y/Y). Total housing inventory reported in at 1.23M, up 7.0% over April's inventory (-20.6% Y/Y). Properties typically remained on the market for 17 days, unchanged from April. Eighty-nine percent of the homes sold in May 2021 were on the market for less than a month. The median sales price increased to $350,300 (+23.6% Y/Y). The median existing single-family home price was $356,600 in May (+24.4%Y/Y) while existing condo price was $306,000 (+21.5%). Regionally only the Midwest saw an increase in existing-home sales (+1,6%). Sales dropped in the West (-4.1%), Northeast (-1.4%), and the South (-0.4%).
Fed Chairman Jerome Powell said in his testimony Tuesday before the Select Subcommittee on the Coronavirus Crisis that recent price increases are temporary and due to supply bottlenecks as well as extremely strong demand for labor, goods, and services. He also indicated that inflationary figures are skewed due to the sharp price drops that occurred at the pandemic’s onset. The Fed Chair acknowledged that “these effects have been larger than we expected and they may turn out to be more persistent than we expected” and that “the incoming data are very much consistent with the view that these are factors that will wane over time and then inflation will then move down toward our goals.”
The Bureau of Economic Analysis’ third estimate on first quarter gross domestic product (GDP) growth reported an economy expanding at an annual rate of 6.4%, outpacing 4.3% for the fourth quarter. Increases in personal consumption expenditures (PCE), nonresidential fixed investment, federal government spending, residential fixed investment, and state and local government spending were partially offset by decreases in private inventory investment and exports. Imports, which take away from GDP, increased as companies struggled with supply-chain issues. PCE was driven by an upswing in durable goods, which itself was led by motor vehicles and parts. Non-durable goods also increased, led by food and beverages, and an increase in spending for services, led by food services and accommodations. The increase in nonresidential fixed investment was pushed by an upsurge in equipment, led by information processing equipment and intellectual property products, led by software. The decrease in private inventory investment was mainly due to a drop in inventories for motor vehicles and parts dealers.
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