Elevated mortgage rates, high home prices and a lack of for-sale listings continue to hamper U.S. home sales, with Redfin reporting Friday that sales in May 2024 dropped to one one of the lowest levels of the past decade.
The monthly rate of home sales, adjusted for seasonality, fell below 408,000 in May. That was down 1.7% from the prior month and 2.9% below year-ago levels.
According to the national real estate brokerage, only two months in the past decade have seen lower levels of home sales than last month. The first occurred in May 2020, when the lockdowns imposed during the COVID-19 pandemic brought in-person showings and sales to a halt. The second occurred in October 2023 when mortgage rates peaked at their highest point since 2000.
Data continues to reflect seller-friendly market conditions as the median sale price reached another record high of $439,716 — up 5.1% year over year. This is due to a lack of supply as the number of listings in May remained about 25% below pre-pandemic levels, Redfin reported.
“Buyers today are facing many of the realities of a hot market even though few homes are changing hands,” Redfin senior economist Elijah de la Campa said in the report. “Sales are sluggish because high homebuying costs are making both house hunters and prospective sellers skittish. And with so few homes for sale, buyers in some markets are getting into bidding wars, which is helping push home prices to record highs.”
One factor working in favor of buyers, however, is the fact that one in five listings (19.2%) in May included a price cut, Redfin reported. That was up from 13.2% in May 2023 and close to the record high of 21.7% seen in October 2022.
Some metro areas, including Indianapolis, Tampa and Denver, saw more than 40% of listings accompanied by a price cut. At the other end of the spectrum were Newark, New Jersey; Lake County, Illinois; and Milwaukee, where fewer than one in six listings had received a cut.
“Some sellers are reducing their prices because they listed their home for too much initially and it ended up sitting on the market,“ the report explained. “Price drops are particularly common in areas where housing supply has been rising quickly, like Florida and Texas. In these areas, individual home sellers have been facing strong competition from homebuilders.“
Of the 10 U.S. metros with the highest shares of price cuts, three were in Florida and three were in Texas.
A separate Redfin report published Wednesday noted that the share of listings considered “stale“ had grown over the past year. Last month, 61.9% of listings had been on the market for at least 30 days without going under contract, up from 60% one year ago and 50% two years ago.
Furthermore, two in five homes (40.1%) homes listed last month had been on the market for at least 60 days, up from a share of 27.8% in May 2022.
“More homes for sale paired with slow demand means that less-desirable listings are piling up, leaving some of them without a buyer,“ the report stated.
In analyzing the 85 U.S. metro areas with a population of 750,000 or more, Redfin found that Anaheim, California, led the nation with median sale price growth of 17.6% during the year ending in May 2024. It was followed by Cleveland (+15.1%) and Nassau County, New York (+14.2%).
