Property prices in the U.S. have seen a relentless climb with median prices rising above $400,000 for the first time while sales activity has slowed due to higher mortgage rates.
Sale of existing homes dropped for a fourth straight month to 3.4% in May, the weakest rate since June 2020, according to the National Association Realtors (NAR). Sales were 8.6% lower than in May 2021.
Around 1.6 million homes were up for sale at the end of May, an increase of 12.6% month to month but still down by 4.1% from May 2021. At the current sales pace, unsold inventory sits at 2.6 months of supply, up from 2.2 months in April and 2.5 months in May 2021.
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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.
The low supply has pushed the rates up. 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.
Rapidly rising rates and record home prices have put a tough challenge for first-time buyers. 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 – released in late 2021.
Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year,” said NAR Chief Economist Lawrence Yun.
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