Sales of pre-owned homes fell for the third straight month in May as prices hit an all-time high. Year-over-year sales were down 2.8%.
According to the National Association of Realtors (NAR).Existing home sales fell 0.7% in May to 4.11 million units on a seasonally adjusted annual basis.
Combined with high interest rates hovering around 7%, conditions continue to plague the market with affordability challenges for homebuyers.
“I thought we would bounce back this spring,” Lawrence Yun, NAR’s chief economist, said during a press call on Friday. “We didn’t see that.”
Only the Midwest, rated as the nation’s most affordable region by several metrics, saw home sales increase. Home sales were flat in three of the four US regions; Only the South saw a monthly decline.
read more: Mortgage rates are below 7% – is it a good time to buy a home?
A ‘strange phenomenon’ in the market
The inventory of homes for sale rose nearly 7% in May to 1.28 million units, according to the NAR. The current level is considered a 3.7-month supply, the highest in four years. Inventory was nearly 19% higher than in the same month a year ago.
“People’s circumstances change,” Yun said. Families looking to retire in different locations, families with new children who need a bigger home, and workers moving for new jobs are the reasons homeowners list their homes.
“Over time, people can’t afford to live in the same house,” Yun said. However, inventory is much lower than in the pre-pandemic period, from 1.8 million to 2.3 million units in 2019.
According to the NAR, the median home price rose nearly 6% year-over-year in May to $419,300. Home prices have posted year-over-year gains for 11 consecutive months. May’s increase indicates the strongest price estimate since October 2022.
Properties typically stayed on the market for 24 days in May, two days less than in April but more than last May’s 18 days. While annual increases indicate a softer market, anything under 30 days is considered a rapid turnaround, according to the trade group.
1 in 3 homes sold above list price and received an average of two to three offers.
“There is a strange phenomenon where home sales activity is low,” Yun said.[yet] Prices have hit record highs, and homes seem to be getting even more bargains.”
For the second consecutive month, the share of purchases by first-time home buyers exceeded 30%.
“It shows the resilience of first-time buyers,” Yun said.
Lack of affordable housing
Sales for homes priced over $1 million increased 23%, the highest among all price points. In contrast, sales of homes priced under $100,000 and $250,000 fell 16% and 6%, respectively.
“It’s not that people aren’t interested in buying a $200,000 house,” Yun said. “People are very interested [but the] The inventory simply doesn’t exist.”
The current monthly payment to buy a median-priced home is about $2,200, more than double the pre-pandemic average of $1,000.
“[The] The American people are feeling the impact,” Yun said.
Rebecca Chen is a reporter for Yahoo Finance and previously worked as an investment tax Certified Public Accountant (CPA).
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