Existing-Home Sales Declined 3.4% in May
Washington, DC, June 21, 2022-Total existing-home sales fell 3.4% from April to a seasonally adjusted annual rate of 5.41 million in May. Year-over-year, sales receded 8.6% (5.92 million in May 2021).
"Home sales have essentially returned to the levels seen in 2019-prior to the pandemic-after two years of gangbuster performance," said NAR Chief Economist Lawrence Yun. "Also, the market movements of single-family and condominium sales are nearly equal, 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."
Total housing inventory registered at the end of May was 1,160,000 units, an increase of 12.6% from April and a 4.1% decline from the previous year (1.21 million). Unsold inventory sits at a 2.6-month supply at the current sales pace, up from 2.2 months in April and 2.5 months in May 2021.
"Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year," Yun added. "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."
The median existing-home price for all housing types in May was $407,600, up 14.8% from May 2021 ($355,000), as prices increased in all regions. This marks 123 consecutive months of year-over-year increases, the longest-running streak on record.
Properties typically remained on the market for 16 days in May, down from 17 days in April and 17 days in May 2021. Eighty-eight percent of homes sold in May 2022 were on the market for less than a month.
First-time buyers were responsible for 27% of sales in May, down from 28% in April and down from 31% in May 2021. NAR's 2021 Profile of Home Buyers and Sellers reported that the annual share of first-time buyers was 34%.
"The relentless climb in U.S. home values continued in May, when median prices shot above $400,000 for the first time while sales activity slowed under pressure from higher mortgage costs," says the Wall Street Journal.
"Rapidly rising interest rates are rippling through U.S. markets as the Federal Reserve tries to combat inflation. Stocks entered a bear market this month, consumer sentiment has taken a hit, and economists are forecasting an increasing likelihood of recession as higher rates threaten to choke off growth.
"But home-buying demand continues to exceed unusually low levels of supply and propel prices higher. The median existing-home price rose 14.8% in May from a year earlier to $407,600, a record high in data going back to 1999, the National Association of Realtors said Tuesday. That rate was up slightly from the previous month.
"The combination of rapidly rising rates and record home prices is squeezing many buyers out of the market and making it especially challenging for first-time buyers."