The Good Brigade/Getty Images; Illustration by Austin Courregé/Bankrate
Key takeaways
- Existing-home sales in May 2024 fell 0.7 percent from April and are down by 2.8 percent from a year ago, according to the National Association of Realtors.
- The nationwide median sale price was $419,300, up 5.8 percent from last year and a new record high.
- Inventory in May rose to a 3.7-month supply, a 6.7 percent improvement over April but still low enough to be considered a seller’s market.
The housing market again showed a slowdown in sales but a rise in prices in May, a new report by the National Association of Realtors (NAR) shows. Sales of existing homes fell 0.7 percent month-over-month and 2.8 percent year-over-year, despite more listings hitting the market. The annual pace of home sales slowed in May to 4.11 million.
High mortgage rates certainly contribute to the sluggish sales figures. While rates have remained below the 8 percent mark briefly seen in October 2023, they are still around 7 percent. The average rate on a 30-year fixed-rate loan was 7.03 percent as of June 19, according to Bankrate’s most recent survey of large lenders. Combined with record prices — the median home price in May was a new all-time high — that means affordability challenges remain daunting for homebuyers.
The fate of the housing market in the coming months will be dictated in part by the direction of mortgage rates.
— Mark Hamrick, Bankrate Senior Economic Analyst
“The fate of the housing market in the coming months will be dictated in part by the direction of mortgage rates, as well as the health of the broader economy,” says Mark Hamrick, Bankrate’s senior economic analyst. “The market could benefit from a combination of tailwinds, if they were to develop and are sustained.”
Existing-home sales tick downward
The count of existing-home sales includes all completed resales, including single-family houses, condos, townhouses and co-ops. According to NAR, the number of sales nationally fell 2.8 percent year-over-year to an annual pace of 4.11 million transactions in May 2024.
Regionally, May sales fell the most in the South, down 5.1 percent year-over-year and 1.6 percent from April. In the Northeast, sales were down 4.0 percent from last year and flat month-over-month. The West saw a 1.3 percent drop from last year and were flat from the previous month, while the Midwest was the only region to rise, flat from April but up 1.0 percent from May of last year.
Days on market
Properties typically remained on the market for 24 days in May, a down slightly from 36 days in April. But in May 2023, that figure was just 18 days. Selling times are a crucial measure at any time of year, but especially during the spring selling season.
Home prices hit new all-time high
The nationwide median sale price for existing homes in May clocked in at $419,300, up 5.8 percent from last year and the highest price NAR has ever recorded. The jump marks the 11th month in a row of year-over-year price increases. The previous home-price record was set in June 2022, when the median price hit $413,800.
Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers.
— Lawrence Yun, Chief Economist, National Association of Realtors
“Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers,” NAR Chief Economist Lawrence Yun said in a statement. “The mortgage payment for a typical home today is more than double that of homes purchased before 2020. Still, first-time buyers in the market understand the long-term benefits of owning.” First-time homebuyers made up 31 percent of sales in May, down from 33 percent in April but up from 28 percent in May of last year.
“The record high median price just underscores that homeownership is slipping further away from middle- and lower-income Americans,” said Robert Frick, corporate economist with Navy Federal Credit Union.
All four geographic regions experienced annual price increases in May. The West continued to have the highest median price by far at $632,900, up 5.5 percent from a year ago. In the Northeast, the median rose 9.2 percent from a year ago to $479,200. The South’s median price rose 3.6 percent to $374,300, and the Midwest’s median rose 6.4 percent to $317,100.
Housing inventory on the rise, but still too low
Total housing inventory — the overall number of homes for sale on the market — stood at 1.28 million units at the end of May. That’s an improvement, up 6.7 percent from April and a significant 18.5 percent jump from a year ago. Even so, it represents only a 3.7-month supply, which is still short of the five to six months typically required for a healthier, more balanced market.
The sharp rise in mortgage rates seen this past fall has kept many homeowners from selling, which keeps existing homes off the market. Those who locked in rates at 3 percent several years ago, understandably, are not keen on moving with current rates more than double that. And rates may not dip significantly anytime soon.
However, more inventory gives housing economists a reason to hold out hope for the future. “Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions,” said Yun. “Eventually, more inventory will help boost home sales and tame home price gains.”
Read the full article here
