IRVINE, CA—Auction.com has released its May Auction.com Real Estate Nowcast which projects that existing home sales for the month of May will fall between seasonally adjusted annual rates of 5.03 and 5.34 million annual sales, with a targeted number of 5.18 million—up 2.9% from April and 5.8% from a year ago.
“Heading into the summer buying season, we're expecting to see healthy increases in home sales activity – though those increases will likely occur at a more modest pace,” said Auction.com Executive vice president Rick Sharga. “While the jump we saw in March somewhat made up for lackluster performance in January and February, tight inventories, strict lending standards and diminished participation by investors remain significant obstacles for the market.”
Sharga also noted that the volatility seen over the past six months is a reminder for economists, investors and real estate professionals to keep monthly performance data in perspective. “It's important to keep blips like the one we saw in March in context. We're in an unusually volatile period in the housing market, with almost unprecedented swings in sales volumes from month to month. The bottom line is that in a truly healthy housing market, we'd already be on pace for 6 million existing home sales, but at this rate, I expect that the market will stay in the 5 million range for at least the remainder of the year.”
Late last week the National Association of Realtors released its existing home sales data for April, reporting that home sales were at 5.04 million units – a 3.3% decrease from the March pop in sales, though still up 6.1% from a year ago. The monthly decrease was unexpected by both Auction.com and Consensus estimates, both having predicted an April increase based on the market's strong performance in March.
NAR also reported an April pop in existing home prices to $221,230 – within the range of $201,052 and $222,215 that Auction.com predicted last month and indicating an 8.9% increase compared to a year ago. This marks a new cyclical peak for home prices, which are now just 2.6% below their pre-bust level.
Findings from the Auction.com Real Estate Nowcast suggest that sales prices for existing homes will fall between $209,759 and $231,839 during the month of May, with a targeted price of $220,799. This represents a 4.2% year-over-year increase for the month.
“In our estimation, this burgeoning home price strength should help to boost sales out of their range, as a key constraint to sales at this time is the low level of inventory for sale,” said Auction.com chief economist Peter Muoio. “Higher prices should entice more sellers into the market.”
But, stronger owner-occupier demand is also needed to offset current subdued investor purchasing activity. “The good news on that household formations have been following a much better path recently, following the Census Bureau's massive revisions released last summer,” he said. “The improving economy should generate continued healthy household formations and therefore stronger demand for homes down the road.”
The Auction.com Real Estate Nowcast combines industry data, proprietary company transactional data and Google search activity to predict market trends as they are occurring – weeks before the findings of other benchmark studies are released. Building upon the groundbreaking work by Google chief economist Hal Varian, Auction.com's nowcast model extends a traditional autoregressive-forecasting model to incorporate contemporaneous information that provides significantly enhanced accuracy.
Auction.com will occasionally update its nowcast as fresh data provides additional signals for current home sales activity. The Real Estate Nowcast model has proven highly accurate over the course of 2014 and into 2015, Auction.com says.

Existing Home Sales