Sales of previously owned homes are at a 30-year low and haven’t moved much in May as prices hit a new record and mortgage rates remain high.
So-called existing home sales were essentially flat in May, down 0.7% from April at a seasonally adjusted, annual rate of 4.11 million units, according to the National Association of Realtors, or NAR. Sales were down 2.8% from May last year.
This number of closed sales is based on contracts signed in March and April. The sluggish sales pace came as rates took a big leap in April.
According to Mortgage News Daily, the average rate for a popular 30-year fixed loan started below 7% and peaked at 7.5% in mid-April. That rate now stands at 7%.
“Home sales are refusing to recover,” said Lawrence Yun, chief economist at NAR. “I thought we would see a recovery this spring.” We didn’t see that.”
Homes in Issaquah Highlands, Washington, U.S., on Tuesday, April 16, 2024.
David Ryder | Bloomberg | Good pictures
Month-on-month sales were flat in all regions except South, where they fell 1.6%.
The biggest change in May was the inventory of homes for sale, up 6.7% and 18.5% from May last year. At the current sales pace, there is now a 3.7 month supply. While inventory is increasing, it is still limited by population and demand.
“Ultimately, higher inventory will help boost home sales and curb home price gains in the coming months. A higher housing supply bodes well for consumers who want to look at more properties before making purchase decisions,” Yun added.
That demand continues to drive up prices. The median price of a home sold in May was $419,300, a record-high price on record for realtors and up 5.8% year-over-year. This gain is very strong after October 2022. Prices increased in all regions.
The mortgage payment on a typical home is twice as high today as it was five years ago, Realtors noted in a release. Not only have rates gone up, home prices are 50% higher than they were five years ago. This comes in part because the average is skewed toward the high end.
Sales of homes priced under $250,000 were lower than a year ago, while sales between $250,000 and $500,000 rose only 1%. Sales prices between $750,000 and $1 million were up 13%, and sales over $1 million were up nearly 23%.
Cash is still king, accounting for 28% of sales. First-time buyers accounted for 31% of sales, up from 28% the previous year.
Two-thirds of homes went under contract within a month, so competition is still strong despite high prices. Real estate brokerage Redfin reports that an increasing number of listings are getting older, so if a home that’s priced well and doesn’t need a lot of work comes on the market, it goes faster. Other houses sit longer.
