Several weeks ago, I began a column with this sentence: “Selling a home in April was easier than it has been in a long time.”
What was true of April definitely was not true of May. May was the most difficult month to sell a home since December, as sales fell sharply while the inventory remained about the same.
The bottom chart tells the story clearly. If you look at April’s sales and inventory, you can see how close the two lines were to each other. The closer those lines get, the easier it is to sell a home. That’s because higher sales and lower inventory force buyers to compete with each other. When buyers compete hard enough, home prices rise.
With a sales-chances figure of 31 percent, April was the most competitive month we have seen since 2005.
Everything changed in May.
Can you see how much farther apart those lines are for May? That steep drop in sales and slight drop in inventory meant buyers just weren’t competing like they were in March and April.
Sales chances dropped to 19 percent in May, the lowest they’ve been since December posted chances of 17 percent.
Sales chances are calculated by dividing a month’s sales figures by the inventory on the last day of the month, resulting in a percentage. A figure below 20 percent indicates a buyer’s market. Higher figures mean we’re in a balanced market or a seller’s market.
As you know, April’s sales surge was due largely to the federal homebuyer’s tax credit, which expired April 30. May suffered the aftershocks of the tax credit’s expiration, but perhaps by the end of July we will have returned to a more predictable market cycle.
Regardless, we probably won’t see a really strong seller’s market again (with sales chances approaching 30 percent) until spring 2011 at the earliest.
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The statistics in this story reflect a metropolitan area that includes the Maryland counties of Montgomery, Prince George’s, Anne Arundel, Howard, Charles and Frederick; the Virginia counties of Arlington, Fairfax, Loudoun, Prince William, Spotsylvania and Stafford; the city of Alexandria; and the District.
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