Existing home sales are at their lowest level in 30 years and didn't budge much in May as prices hit a new record and mortgage rates remain high.
Sales of so-called existing homes in May were essentially flat, down 0.7% from April to a seasonally adjusted annualized rate of 4.11 million units, according to the National Association of Realtors, or NAR. Sales fell 2.8% from May last year.
This count of closed sales is based on contracts likely signed in March and April. The slow pace of sales came as rates took a big jump in April.
The average rate on the popular 30-year fixed loan started the month just below 7% and then rose to just over 7.5% in mid-April, before retreating slightly in May, according to Mortgage News Daily. That rate is now around 7%.
“Home sales refuse to recover,” said Lawrence Yun, NAR's chief economist. “I thought we'd see a recovery this spring. We're not seeing it.”
Homes in the Issaquah Highlands area in Issaquah, Washington, USA, on Tuesday, April 16, 2024.
David Ryder | Bloomberg | fake images
Sales were unchanged month over month in all regions except the South, where they fell 1.6%.
The biggest change in May is that the inventory of homes for sale increased, 6.7% month over month and 18.5% more than May of last year. At the current sales rate, there is now a supply for 3.7 months. While inventory is increasing, it is still very low given demographics and demand.
“Over time, increased inventory will help boost home sales and moderate home price growth in the coming months. The increased housing supply is good news for consumers who want to see more properties sooner.” making purchasing decisions,” Yun added.
Record prices
That demand continues to drive up prices. The median price of an existing home sold in May was $419,300, a record price on record for real estate agents and an increase of 5.8% year over year. The gain was the strongest since October 2022. Prices rose in all regions.
Real estate agents said in a statement that the mortgage payment on a typical home today is more than double what it was five years ago. Not only have rates risen, but home prices are more than 50% higher than five years ago. This is partly because the median is tilting toward the higher end.
Sales of homes priced under $250,000 were lower than a year ago, while sales priced between $250,000 and $500,000 increased just 1%. Sales priced between $750,000 and $1 million were 13% higher, and sales priced above $1 million were up nearly 23%.
Cash is still king and accounts for 28% of sales. First-time buyers account for 31% of sales, up from 28% a year earlier.
Two-thirds of the homes went under contract in less than a month, so competition remains strong despite the higher prices. Redfin, a real estate brokerage, reports that an increasing number of listings are becoming stale, so if a home comes on the market that's priced well and doesn't need a lot of work, it's snapped up quickly. Other houses stay longer.
