KANSAS CITY – Though still up almost 10 percent from a year ago, home sales in May dropped 1.5 percent from the month before, according to a press release from the National Association of Realtors.
The trend of existing homes sales is still upward, but the drop announced today represents a slight slowdown in the market. Lawrence Yun, an economist with the association, attributed the decrease in home sales to the supply of homes on the market, rather than a decrease in demand.
At a panel discussion about home foreclosures and mortgages hosted by the Kansas City Federal Reserve yesterday, senior economist Kelly Edmiston struck a similar note.
Edmiston pointed out that both house prices and home buyer traffic (such as open houses and home showings) are up since last year, indicators of revived housing demand.
Edmiston said the supply of homes for sale is still not what it could be. One reason for this, in his view, is that many potential sellers are holding out because they think the market is still bad. But Edmiston anticipates higher prices might lure the hold outs into the market, increasing supply.
Edmiston had even experienced the upswing in the market personally. He said he had recently purchased a new house and, in the process, was met with competing offers. At one point he lost out on a home he wanted to purchase because of a higher offer from another buyer.
It irked him as a shopper, but pleased him as an economist.
While Edmiston pointed to the signs of good news in the housing market—higher prices, more general traffic, lower rates of foreclosures—there are still several complicating factors the market hinges on. Financial instability in Europe, U.S. fiscal woes and job growth all have the potential to ripple out into housing.
In the face of these factors (and without today’s news from the National Association of Realtors), Edmiston showed cautious optimism.
“Things are beginning to look up,” he said.