Home sales are at a 30-year low and were little changed in May as prices hit a new record and mortgage rates remain high.
According to the National Association of Realtors (NAR), so-called existing home sales were essentially flat in May, falling 0.7% from April to a seasonally adjusted annual rate of 4.11 million units. Sales fell 2.8% compared to May last year.
This closed sales figure is based on contracts expected to have been signed in March and April. The sluggish pace of sales was due to interest rates making a big jump in April.
According to Mortgage News Daily, the average interest rate on the popular 30-year fixed loan was just under 7% at the start of the month and then rose to just over 7.5% by mid-April before leveling off slightly in May. This rate is currently around 7%.
“Home sales are not recovering,” said Lawrence Yun, NAR chief economist. “I thought we would see a recovery this spring. We don’t see them.”
Homes in the Issaquah Highlands area of Issaquah, Washington, USA, on Tuesday, April 16, 2024.
David Ryder | Bloomberg | Getty Images
Sales remained flat 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 jumped, up 6.7% month over month and 18.5% higher than May last year. At the current sales pace, the supply is now 3.7 months. While inventory levels are increasing, they are still very low due to demographics and demand.
“Ultimately, more inventory will help boost home sales and curb house price increases in the coming months. The increased housing supply means good news for consumers who want to view more properties before making a purchase decision,” Yun added.
Record prices
This demand continues to drive prices higher. The median price for an existing home sold in May was $419,300, a record price in real estate agent records and a 5.8% increase from a year ago. The increase was the strongest since October 2022. Prices increased in all regions.
The brokers noted in a news release that mortgage payments on a typical home are now more than double what they were five years ago. Not only have interest rates risen, property prices are also more than 50% higher than they were five years ago. This is partly because the median tends toward the high end.
Sales of homes priced under $250,000 were lower than a year ago, while sales priced between $250,000 and $500,000 rose just 1%. Sales priced between $750,000 and $1 million were up 13%, and sales priced above $1 million were up nearly 23%.
Cash is still king, accounting for 28% of sales. First-time buyers account for 31% of sales, up from 28% last year.
Two-thirds of the homes went under contract in less than a month, so competition is still strong despite higher prices. Redfin, a real estate broker, reports that more and more listings are out of date. So when a home comes on the market that’s a good price and doesn’t require a lot of work, things move quickly. Other houses sit longer.
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2024-06-21 17:40:18
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