Existing-home sales slightly decreased in May as the median sales price soared to a record high, according to the National Association of Realtors.
In the four major U.S. regions, sales fell month-over-month in the South and were unchanged in the Northeast, Midwest, and West. Sales increased year-over-year in the Midwest but receded in the Northeast, South, and West.
Total existing-home sales—completed transactions that include single-family homes, townhomes, condominiums and co-ops—retreated 0.7% from April to a seasonally adjusted annual rate of 4.11 million in May. Year-over-year, sales decreased 2.8% (down from 4.23 million in May 2023).
"Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months," says NAR chief economist Lawrence Yun. "Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions."
Total housing inventory registered at the end of May was 1.28 million units, up 6.7% from April and 18.5% from one year ago (1.08 million). Unsold inventory sits at a 3.7-month supply at the current sales pace, up from 3.5 months in April and 3.1 months in May 2023.
The median existing-home price for all housing types in May was $419,300, the highest price ever recorded and an increase of 5.8% from one year ago ($396,500). All four U.S. regions registered price gains.
"Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers," Yun says. "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."
According to the monthly Realtors Confidence Index, properties typically remained on the market for 24 days in May, down from 26 days in April but up from 18 days in May 2023.
First-time buyers were responsible for 31% of sales in May, down from 33% in April but up from 28% in May 2023. All-cash sales accounted for 28% of transactions in May, unchanged from April and up from 25% one year ago.
Individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes in May, identical to April and up from 15% in May 2023. Distressed sales—foreclosures and short sales—represented 2% of sales in May, unchanged from last month and the previous year.
Single-family home sales declined to a seasonally adjusted annual rate of 3.71 million in May, down 0.8% from 3.74 million in April and 2.1% from the prior year. The median existing single-family home price was $424,500 in May, up 5.7% from May 2023.
“Home prices reached a record high in May, so it's no wonder that the pace of existing home sales slowed. Prospective buyers are inhibited by the combination of high prices and high mortgage rates, which make home buying unaffordable for many families. Slower sales pushed the inventory of unsold homes to its highest level in almost two years,” says Holden Lewis, NerdWallet home and mortgage expert.
“Normally, rising inventory would keep prices in check. But the rise in inventory is concentrated in Florida and Texas, where owners are listing their homes to escape unaffordable home insurance premiums. The buyers in the other 48 states have a limited choice of homes to choose from, thereby pushing prices higher.”
Existing-home sales in the Northeast in May were identical to April at an annual rate of 480,000, a decline of 4% from May 2023. The median price in the Northeast was $479,200, up 9.2% from the prior year.
In the Midwest, existing-home sales were unchanged from one month ago at an annual rate of 1 million in May, up 1% from one year ago. The median price in the Midwest was $317,100, up 6.4% from May 2023.
Existing-home sales in the South fell 1.6% from April to an annual rate of 1.87 million in May, down 5.1% from the previous year. The median price in the South was $374,300, up 3.6% from last year.
In the West, existing-home sales in May were equivalent to April at an annual rate of 760,000, a drop of 1.3% from one year before. The median price in the West was $632,900, up 5.5% from May 2023.
