Existing home sales in the US fell for a third straight month in May while prices set another record, underscoring the ongoing challenges of affordability that have fueled the crucial spring selling season.
Contract closings fell 0.7% from last month to an annual rate of 4.11 million, driven entirely by a decline in the South, according to National Association of Realtors data released Friday. The figure was in line with the median estimate in a Bloomberg survey of economists.
Meanwhile, the inventory of existing homes for sale has increased recently, in part because people who had been waiting for rates to drop before listing their homes decided they couldn’t wait any longer.
The supply of housing on the market increased by 18.5% from the same month last year to 1.28 million, but it is still well below the level seen before the pandemic when mortgage rates were very low.
That explains why prices remain high — the median sales price increased 5.8% from a year ago to a record $419,300, reflecting more sales of higher-priced properties and more offers, NAR data show.
“Relevant home prices are creating a widening divide between homeowners and aspiring first-time buyers,” NAR Chief Economist Lawrence Yun said in a statement. “Ultimately, more inventory will help boost home sales and lower home prices in the coming months.”
Refunds Delayed
Mortgage rates have fallen recently, but the Federal Reserve likely won’t cut interest rates until later this year. Yun said that could slow the recovery in home sales, which had stalled by about 4 million last year.
At the current rate, it will take 3.7 months to sell every home on the market, the highest rate in four years. However, agents see anything less than five months as an indication of a strong market.
About 67% of homes sold were on the market for less than a month in May, roughly flat from the previous month, while 30% sold above list price. Properties stayed on the market 24 days on average in May, compared to 26 days in April, the NAR report said.
The account for the sale of the home is in the largest amount of US net worth and is calculated when the contract closes. The government releases May’s new home sales figures on June 26.
Digging Deeper
- Sales in the South, the largest region, fell for a third month while sales in the other three major regions were unchanged in May.
- Single-family home sales fell 0.8% in May; condos and co-ops were flat
- Individual investors or second home buyers bought 16% of homes in May, the same as last month.
- First-time buyers made up 31% of purchases, down slightly from a month earlier
- Sales were down 1% from a year ago on an unadjusted basis
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