Sales of previously owned homes are sitting at a 30-year low and didn’t move much in May as prices hit a new record and mortgage rates remain high.
So-called existing home sales 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 of last year.
This count of closed sales is based on contracts likely signed in March and April. The sluggish sales pace came as rates took a big leap 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% by mid-April, before settling back slightly in May, according to Mortgage News Daily. That rate is now right around 7%.
“Home sales refuse to recover,” said Lawrence Yun, chief economist at the NAR. “I thought we would see a recovery this spring. We are not seeing it.”
Homes in the Issaquah Highlands area of Issaquah, Washington, US, on Tuesday, April 16, 2024.
David Ryder | Bloomberg | Getty Images
Sales were unchanged month to 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 jumped, up 6.7% month to month and 18.5% higher than in May last year. At the current sales pace, there is now a 3.7-month supply. While inventory is gaining, it is still very low given demographics and demand.
“Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months. Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions,” Yun added.
Record prices
That demand continues to push prices higher. The median price of an existing home sold in May was $419,300, a record-high price in the Realtors’ recording and up 5.8% year over year. The gain was the strongest since October 2022. Prices gained in all regions.
The Realtors noted in a release that the mortgage payment for a typical home today is more than double what it was five years ago. Not only have rates climbed, but home prices are more than 50% higher than they were five years ago. That comes in part because the median is skewing to the higher end.
Sales of homes priced below $250,000 were lower than a year ago, while sales priced between $250,000 and $500,000 were up just 1%. Sales priced between $750,000 and $1 million were 13% higher, and sales priced over $1 million were up nearly 23%.
Cash is still king, accounting for 28% of sales. First-time buyers are hanging in at 31% of sales, up from 28% the year before.
Two-thirds of homes went under contract in less than a month, so competition is still strong despite higher prices. Redfin, a real estate brokerage, is reporting that an increasing number of listings are becoming stale, so if a home comes on the market that is well-priced and doesn’t need much work, it goes fast. Other homes are sitting longer.