Existing home sales declined again in May, falling by 3.4% to a seasonally adjusted annualized rate of 5.41 million units, according to new data from the National Association of Realtors.
On a yearly basis, existing home sales were down 8.6% compared to May 2021.
The NAR said the market is now at its weakest reading since June 2020, during the early months of the COVID-19 pandemic when a lot of activity was temporarily paused. Excluding that month, sales hit their lowest point since January 2020.
The latest data is based on deals that closed in the month, and therefore represents contracts that were likely signed in March and April. At that time, the average 30-year fixed mortgage rate increased from 4% to around 5.5%. Now, the rate is even higher at 6%. Rising rates, along with the low supply of homes and price appreciation have had a devastating impact on affordability.
“I do anticipate a further decline in home sales,” said Lawrence Yun, chief economist at the NAR. “The impact of higher mortgage rates is not yet fully reflected in the data.”
At the end of May the NAR said there were 1.16 million homes for sale across the U.S., up 12.6% month to month but still down 4.1% from a year ago. That represents a 2.6-month supply at the current sales pace, the NAR said.
The low supply of homes for sale is the likeliest reason for home prices edging higher. The NAR said the median price of a home sold in May was $407,660, up 14.8% from a year earlier. That’s the highest median price on record since the NAR began tracking home price data in the 1980s.
The low inventory of homes is especially acute at the lower end of the market. Sales of homes valued at $100,000 to $200,000 were down 27% from the same month last year. There are fewer problems at the upper end of the market though. Sales of homes priced between $750,000 and $1 million jumped 26%, while sales of homes valued at over $1 million increased by 22%.