Sales of existing homes in the US fell for the third month in a row in May
The number of contracts fell 0.7% from a month earlier to 4.11 million on an annual basis, driven entirely by a decline in the South, according to data from the National Association of Realtors released Friday. The figure matched the average estimate in a Bloomberg survey of economists.
Meanwhile, the inventory of existing homes for sale has increased lately, in part because people who have been waiting for a drop in interest rates before putting their homes up for sale have decided they can wait no longer.
The supply of homes on the market has increased by 18.5% to 1.28 million compared to the same month last year, but is still well below pre-pandemic levels, when mortgage rates were much lower.
That explains why prices remain high: The average sales price rose 5.8% from a year ago to a record $419,300, reflecting more sales of expensive properties and multiple offers, NAR data show .
“Home prices reaching new highs are creating a wider gap between those who own real estate and those looking to buy for the first time,” NAR chief economist Lawrence Yun said in a statement. “Ultimately, more inventory will help boost home sales and dampen home price increases in the months ahead.”
At the current pace, it would take 3.7 months to sell all the homes on the market, the highest in four years. Still, agents consider anything under five months indicative of a tight market.
About 67% of homes sold were on the market for less than a month in May, roughly the same as the month before, while 30% were sold above list price. Properties stayed on the market for an average of 24 days in May, compared to 26 days in April, NAR’s report said.
Existing home sales represent the largest share of the U.S. total and are calculated when a contract is closed. The government will publish figures on the sales of new homes for May on June 26.