by Despite rising inventory levels, home prices continue to rise, placing existing homes out of reach for many first-time buyers
WASHINGTON — Existing home sales fell 2.8% in May from May 2023 and fell .7% from April, according to figures released by the National Association of Retailers on Friday.
Sales of single-family homes, condominiums and co-ops totaled 4.11 million in May, down from 4.23 million in May 2023, rising in the Midwest, but falling in the Northeast, South and West. Sales fell from about 4.14 million in April, falling in the South, but remaining flat in the other three regions.
Single-family home sales totaled 3.71 million in May, down 2.1% from May 2023 and down .8% from 3.74 million in April. The median existing single-family home price was $424,500, up 5.78% from May 2023. Existing condominium and co-op sales totaled 400,000 in May, down 9.1% from 440,000 in May 2023 and unchanged from April. The median existing condominium price was $371,300 in May, up 5.1% from $353,300 in May 2023.
The NAR said that total housing inventory at the end of May was 1.28 million units, up 18.5% from the 1.08 million registered a year ago and up 6.7% from 1.20 million in April. Unsold inventory is at a 3.7-month supply based on the current sales pace. This is up from 3.1 months in May 2023 and 3.5 months in April.
“Eventually more inventory will help boost home sales and tame home price gains in the upcoming months,” said NAR Chief Economist Lawrence Yun. “Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions.”
Higher inventory levels also should have a positive impact on home prices, particularly for those first-time buyers wanting to buy an existing home. But home prices continue to rise despite the rising inventory levels. For example, the median existing home price for all housing types in May was $419,300, which was up 5.8% from $396,500 a year ago, with all four regions posting price increases. It also was the highest price recorded by the NAR.
While bolstering the assets of existing homeowners, it also has presented a challenge for first time homebuyers, many of whom don’t either have the down payment necessary to afford a more expensive home or who can’t afford a mortgage based on current interest rate levels.
Or they lose out to all-cash buyers in the market. All-cash sales represented some 28% of transactions in May, which was up 25% from May 2023 and unchanged from April.
The NAR said that individual investors or second-home buyers that make up many cash sales, bought 16% of the homes in May, up 15% from May 2023 and unchanged from April. Meanwhile, first-time buyers were responsible for 31% of sales, up from 28% in May 2023 but down from 33% in April.
“Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers,” Yun noted, adding that 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.”
By region the activity was as follows:
+ In the Northeast, existing home sales totaled 480,000, down 4% from May 2023 but unchanged from April. The median sales price in the region was $479,200, up 9.2% from May 2023.
+ In the Midwest, existing home sales totaled 1 million, up 1% from May 2023 and unchanged from April. The median sales price was $317,100, up 6.4% from May 2023.
+ In the South, existing home sales totaled 1.87 million, down 5.1% from May 2023 and down 1.6% from April. The median sales price in the region was $374,300, up 3.6% from May 2023.
+ In the West, existing home sales totaled 760,000 in May, down 1.3% from May 2023 and unchanged from April. The median sales price in the region was $632,900, up 5.5% from May 2023.
Other highlights from the report were as follows:
+ Properties remained on the market for about 24 days in May, up from 18 days in May 2023 but down from 26 days in April.
+ Distressed sales, including foreclosures and short sales, represented 2% of sales in May, unchanged from May 2023 and from April.
+ Citing Freddie Mac, the NAR said that the 30-year fixed-rate mortgage averaged 6.87% as of June 20, down from 6.95% the week before, but up from 6.67% a year ago.
