SThe number of homes in the United States that were previously owned fell by 4% in May. This is the fourth consecutive month of decline. It was at its lowest point in almost two years.
The number of contract closings fell 3.4% from May to 5.41m, an annualized decrease of 3.4%, according to figures released Tuesday by the National Association of Realtors. This is the lowest level since June 2020. According to a Bloomberg survey, economists expected 5.4 million.
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In an attempt to control the inflation rate, Federal Reserve raises interest rates aggressively. That’s driven up mortgage rates to levels not seen since 2008. The same time, prices for homes continue to climb, making it more difficult for buyers all across the country.
“Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year,” Lawrence Yun, NAR’s chief economist, said in a statement. “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.”
There were 1.16 million homes on the market last year, down from 1.18 million a previous year. It would take approximately 2.6 months for all homes to be sold at the current pace of sales. This was a fourth straight month with an improvement in supply, despite being historically low. A tight market is characterized by a supply of less than five months.
A record $407,600 was achieved by the median selling prices, which rose 14.8% compared to last year. The 27% figure for U.S. first-time buyers was lower than 31% last year. It also underlines the affordability problems that have kept many Americans from buying.
According to the Realtors Group, sales tend to be concentrated at the top of the market.
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In May, cash sales accounted for 25% of transactions. This is an increase from the 23% recorded in the previous month. The market was 16% dominated by investors, who tend to buy in cash, and therefore are less sensitive than mortgage rates.
—With assistance from Jordan YadooAnd Olivia Rockeman.
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