Existing home sales are at a 30-year low and were little changed in May as prices hit new records and mortgage rates remained high.
So-called existing home sales were essentially flat in May, down 0.7% from April to a seasonally adjusted annualized rate of 4.11 million units, according to the National Association of Realtors (NAR). Sales fell 2.8% compared with May last year.
Statistics on completed sales are based on contracts likely to be signed in March and April. The slow pace of sales coincided with a sharp increase in interest rates in April.
According to Mortgage News Daily, the average interest rate on the popular 30-year fixed loan started the month just under 7%, then rose to just over 7.5% by mid-April before falling back slightly in May. . Currently the ratio is about 7%.
“Home sales are refusing to recover,” said NAR Chief Economist Lawrence Yun. “I thought we would see an economic recovery this spring. But we didn’t.”
A home in the Issaquah Heights area of Issaquah, Washington, United States, on Tuesday, April 16, 2024.
David Ryder | Bloomberg | Getty Images
Sales were flat from the previous month in all regions except the southern region, which fell 1.6%.
The biggest change in May was the surge in the inventory of homes for sale, which grew 6.7% from the previous quarter and was 18.5% higher than last May. At the current sales rate, the current supply lasts 3.7 months. Although inventories are increasing, they remain low given demographics and demand.
“Ultimately, more inventory will help boost home sales in the coming months and curb home price increases. The increased supply of homes is good news for consumers who want to see more properties before making a buying decision. ,” Yun added.
record price
This demand continues to drive up prices. The median price of an existing home sold in May was $419,300, an all-time high recorded by real estate agents and up 5.8% year over year. The gains were the strongest since October 2022.
Mortgage payments on a typical home today are more than double what they were five years ago, real estate agents noted in a news release. Not only are interest rates climbing, but home prices are also up more than 50% from five years ago. Part of the reason is that the median is skewed toward the high end.
Sales of homes priced under $250,000 were down from a year ago, while sales of homes priced between $250,000 and $500,000 increased just 1%. Sales between $750,000 and $1 million were up 13%, and sales over $1 million were up nearly 23%.
Cash remains king, accounting for 28% of sales. First-time homebuyers accounted for 31% of sales, up from 28% last year.
Two-thirds of homes go under contract in less than a month, so competition remains fierce despite rising prices. Real estate brokerage Redfin reports that more and more listings are becoming older, so if a home on the market is reasonably priced and doesn’t require much maintenance, it will come on the market quickly. Other families sit for longer periods of time.
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