The latest data on the sale of previously owned homes shows that the market is experiencing a significant slowdown, with sales sitting at a 30-year low. In May, there was little movement in sales figures, with a decrease of 0.7% compared to April. This stagnation in the market is further exacerbated by soaring prices and high mortgage rates.
According to the National Association of Realtors (NAR), existing home sales in May were essentially flat, with a seasonally adjusted, annualized rate of 4.11 million units. This represents a 2.8% decline from May of the previous year. The chief economist at the NAR, Lawrence Yun, expressed disappointment in the lack of recovery in home sales, stating, “Home sales refuse to recover.”
One of the most significant changes in May was the increase in the inventory of homes for sale, which saw a 6.7% jump from the previous month and an 18.5% increase from May of the previous year. Despite this boost in inventory, the supply is still limited, with only a 3.7-month supply available at the current sales pace. The rise in inventory could potentially lead to an increase in home sales and a stabilization of home price gains in the coming months.
The demand for homes continues to keep prices on the rise, with the median price of an existing home sold in May reaching a record-high of $419,300. This represents a 5.8% increase from the previous year, marking the strongest gain since October 2022. Prices saw an increase in all regions, contributing to the overall surge in home prices.
The data shows that the median price of homes has more than doubled in the past five years, primarily due to rising interest rates and escalating home prices. Homes priced below $250,000 saw a decline in sales compared to the previous year, while sales of homes priced between $750,000 and $1 million increased significantly. Cash transactions accounted for 28% of sales, while first-time buyers made up 31% of the market.
Despite the challenges in the housing market, two-thirds of homes went under contract in less than a month, indicating robust competition. Real estate brokerage Redfin reported that well-priced listings in good condition are selling quickly, while others are languishing on the market. This highlights the importance of pricing and presentation in a competitive market environment.
The current state of the housing market presents various challenges for both buyers and sellers. With stagnant sales, soaring prices, and limited inventory, the industry needs to navigate these challenges to achieve a more balanced and sustainable market. While increased inventory may help alleviate some of these pressures in the short term, long-term solutions are needed to address the underlying issues in the housing market.
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