Strong buyer demand coupled with limited housing inventories saw sales of existing-homes fall for the four month in a row in May.
Existing home sales were down 0.9% compared to the month before, though they will still up 44% on a year over year basis, according to the National Association of Realtors in its latest report.
The median price fetched for an existing home hit $350,300 during the month.
NAR Chief Economist Lawrence Yun said home sales fell “moderately” during the month and are now beginning to approach pre-pandemic levels of activity.
“Lack of inventory continues to be the overwhelming factor holding back home sales, but falling affordability is simply squeezing some first-time buyers out of the market,” he added.
Digging into the NAR’s May existing-home sales report, it shows that 89% of homes listed for sale were on the market for less than a month before going under contract. Homes typically sold in 17 days, down from 26 days in May 2020. Home prices meanwhile rose to a median of $350,300, up 23.6% from one year before.
Every major region in the U.S. saw home price increase. The biggest increase was seen in the West, with the median home price reaching $505,600, up 24.3% from a year ago despite a 4.1% drop in home sales month over month. The South also saw home sales fall, by 0.4%, with the median sales price rising 22.6% to $299,400.
In the Midwest, the median sales price for an existing home jumped 18.1% to $268,500, with sales actually rising there by 1.6% compared to the previous month. And in the Northeast, median prices were up 17.1% to $384,300, with existing home sales declining by 1.4% from the previous month.
The NAR’s report also looked at housing inventory. It found that total housing inventory in the U.S. at the end of May was 1.23 million units, up 7% from April. However, that is still 20.6% less than in May 2020. Unsold inventory now sits at a 2.5-month supply at the current sales pace.
Regarding who is buying homes, first-time buyers still make up a good chunk a 31% of all sales, though that is down from 34% one year ago. Individual investors snapped up 17% of all existing homes, up from 14% one year ago. Those buyers tend to make more cash offers than usual, and when we look at all-cash sales only, they accounted for 23% of all transactions.
Finally, the report looked at distressed sales and found that foreclosures and short sales represented less than 1% of all transactions, compared to 3% a year ago. That’s because Federal pandemic-related foreclosure moratoriums are still in place until the end of June.
Overall, Yun said he sees an encouraging overall outlook for the housing market. “Supply is expected to improve, which will give buyers more options and help tamp down record-high asking prices for existing homes,” he said.