For the fourth month in a row, existing-home sales have declined, with May’s year-over-year sales dropping in all four major regions in the country. According to the National Association of Realtors (NAR), month-over-month sales fell in three of the four regions. Climbing mortgage rates have impacted housing affordability, and economists are predicting further sales declines throughout the year. “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,” said NAR Chief Economist Lawrence Yun.
Median Existing-Home Sales Price Exceeds $400,000
Home price appreciation continued to break records, with housing prices increasing for a record 123 consecutive months. In May, the median existing-home price reached $407,600, an increase of 14.8% from May 2021. What’s more, every sales region reported price gains.
Fewer First-Time Buyers
Housing affordability appears to be impacting first-time buyers, as this buying group was responsible for just 27% of all sales in May, down from 28% in April and 31% in May 2021. According to the “2021 NAR Profile of Home Buyers and Sellers,” the annual share of first-time buyers was 34%. All-cash sales made up 25% of all transactions, down from 26% a month ago but up from 23% a year ago. Individual investors and second-home buyers—two groups that account for the majority of cash sales—were responsible for 16% of all purchases, down from 17% both a month and a year ago.
A Return to a Pre-pandemic Market?
After two robust years, home sales are starting to return to levels not seen since 2019. Interestingly, single-family home sales are nearly equal to those of condominiums, according to Yun, “possibly implying that the preference towards suburban living over city life that had been present over the past two years is fading with a return to pre-pandemic conditions.”
Home Inventory on the Rise
In what must be welcome news to all buyers, inventory levels saw a slight improvement in May, with 1,160,000 units available for sale―an increase of 12.6% from April but down 4.1% from May 2021. At the current sales pace, the supply of inventory would last just 2.6 months. On average, properties remained available for just 16 days. Of all the homes sold in May, 88% were available for less than one month.
Regional Sales Breakdown
Northeast: Existing-home sales annual rate of 680,000; an increase of 1.5% from April 2022 but a decrease of 9.3% from May 2021. The median sales price of $409,700 increased 6.7% from May 2021.
Midwest: Existing-home sales annual rate of 1.24 million; a decrease of 5.3% from April 2022 and 7.5% from May 2021. The median sales price of $294,500 increased 9.5% from May 2021.
South: Existing-home sales annual rate of 2.41 million; a decrease of 2.8% from April 2022 and 8.4% from May 2021. The median sales price of $375,000 increased 20.6% from May 2021, setting the highest pace of price appreciation in the country for the ninth month in a row.
West: Existing-home sales annual rate of 1.08 million; a decrease of 5.3% from April 2022 and 10% from May 2021. The median sales price of $633,800 increased 13.3% from May 2021.