First American’s Potential Home Sales Model for May shows that potential existing-home sales increased to a 4.92 million seasonally adjusted annualized rate (SAAR), representing a 6.2 percent month-over-month increase.
The market potential for existing-home sales decreased 7.0 percent compared with a year ago, a loss of nearly 368,120 (SAAR) sales.
Currently, potential existing-home sales is 1.81 million (SAAR), or 26.9 percent below the pre-recession peak of market potential, which occurred in March 2004.
Moreover, the market for existing-home sales outperformed its potential by 11.5 percent, or an estimated 565,580 (SAAR) sales.
The market performance gap decreased by an estimated 312,204 (SAAR) sales between April 2020 and May 2020.
“While the coronavirus pandemic continued to negatively impact the domestic and global economy in May, the market potential for existing-home sales rebounded from the April low point,” says Mark Fleming, chief economist at First American.
“In May, housing market potential increased to 4.92 million SAAR, a 6 percent improvement compared with April, but remained 7 percent lower than one year ago. The two biggest drivers of the increase in May are slightly loosening credit standards, which allow more potential home buyers to qualify for financing, and the increase in house-buying power due to historically low mortgage rates,” he adds.
For First American’s full analysis, click here.