Low levels of for-sale inventory, high mortgage rates, and record-high home prices continue to hamper existing-home sales.
According to the May 2024 existing-home sales report from the National Association of Realtors (NAR), sales volume fell 2.8% year over year to an annualized rate of 4.11 million. That number also marked a decline of 0.7% from April.
At the same time, prices hit yet another all-time high, rising to a median of $419,300. That’s a 5.8% year-over-year increase and marked the 11th consecutive month of year-over-year gains.
Rising prices are occurring even as unsold inventory continues to grow. NAR reported there were 1.28 million homes on the market in May, a whopping increase of 6.7% compared to April. At the current monthly sales pace, the market holds 3.7 months of supply.
Inventory gains should eventually put downward pressure on home-price growth, but that doesn’t appear to be happening just yet.
“Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months,” NAR chief economist Lawrence Yun said in a statement. “Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions.”
The trend applies to each of the four geographic regions tracked by NAR. The Northeast showed the highest home-price growth in May, rising 9.2% year over year alongside a 4% decline in sales. The West, Midwest and South regions each posted healthy home price growth in the 5% range compared to May 2023. The Midwest was the only region where sales increased over the past year, rising by a modest 1%.
Other trends remained mostly flat. First-time buyers made up 31% of sales, down from 33% in April but up from 28% one year ago. All-cash transactions comprised 28% of sales, up from 25% a year ago. Individual investors and second-home buyers accounted for 16% of sales, up from 15% a year ago.
“What started as a year of recovery, offered more of the same for the housing market as we finished the spring home buying season,” CoreLogic chief economist Selma Hepp said in a statement. “Home sales disappointed while mortgage rates remained over 7%. Still, if the Fed makes a move in September and mortgage rates fall some, the end of the year could be more promising for home sales.”
