May US existing home sales from the National Association of Realtors fell 3.4% to 5.41 million below market forecasts of 5.40 million. This was the fourth straight month of declines. Higher interest rates are creating affordability pressures for prospective buyers. This is becoming an even bigger factor, on June 16 the average rate on a 30-year, fixed-rate mortgage rose to 5.78%, mortgage-finance giant Freddie Mac said. This is the highest level since November 2008 and well above the 3.11% recorded near the start of the year.
Mortgage rates have risen from record low levels as the economy reopened from coronavirus-induced restrictions.
Existing home sales drop in May on demand slowdown
Existing home sales data for May 2022
- US May existing home sales decreased 3.4% month-over-month in May to a seasonally adjusted annual rate of 5.41 million (consensus 5.40 million) versus a downwardly revised 5.60 million (from 5.61 million) in April. Total sales in April were down 8.6% from a year ago.
- The median existing home price for all housing types increased 14.8% year-over-year to $407,600, representing the 123rd consecutive month of year-over-year gains, which is also longest-running streak on record.
- It is also the first time the median sales price has risen above $400,000.
- The median price for single-family homes increased 14.6% yr/yr to $414,200.
- The inventory of homes for sale at the end of May was up 12.6% month-over-month at 1,160,000 units, but down 4.1% from a year ago.
- Unsold inventory increased to a 2.6-month supply at the current sales pace, versus 2.2 months in April, but it is still well below the 6.0-months’ supply typically associated with a more balanced market.
- First-time buyers accounted for 27% of sales in May, down from 28% in April and 31% in May 2021.
- All-cash sales comprised 25% of transactions in May, down from 26% in April and up from 23% in May 2021.
- 88% of homes sold in May were on the market for less than a month, with properties typically remaining on the market for 16 days, down from 17 days in April and 17 days in May 2021.
NAR chief economist Lawrence Yun:
Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year,” NAR chief economist Lawrence Yun said. “Nonetheless, homes priced appropriately are selling quickly and inventory levels still need to rise substantially – almost doubling – to cool home price appreciation and provide more options for home buyers.”
- Existing home sales across regions: Northeast (+1.5%); Midwest (-5.3%); South (-2.8%); and West (-5.3%).
- Median home prices by region year-over-year: Northeast (+6.7% to $409,700); Midwest (+9.5% to $294,500); South (+20.6% to $375,000); and West (+13.3% to $633,800).
The National Association of Realtors® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.
Existing home sales account for 90% of US transactions and are calculated on a contract close basis. New home sales account for the remaining 10% and are based on contract signings.
Existing-home sales include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR benchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.
Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90% of total home sales, are based on a much larger data sample – about 40% of multiple listing service data each month – and typically are not subject to large prior-month revisions.
From The TradersCommunity News Desk