May Home Sales & Record Prices: Housing Market Update
- Existing home sales experienced a slight uptick in May, according too the National Association of Realtors.
- The Northeast saw the most notable increase in sales, jumping 4.2% month-to-month.
- Lawrence Yun,NAR's chief economist,attributed the subdued market to high mortgage rates.
May’s existing home sales saw a modest rise, defying expectations, but mortgage rates continue to shape the market. Sales increased 0.8% from April, yet prices hit a record high of $422,800. The Northeast saw the strongest gains, while the West declined. Inventory is up,but demand persists. The National Association of Realtors attributes the market’s pace to persistently high mortgage rates.News Directory 3 brings you the latest from the real estate sector, offering expert insights into supply, demand, and economic shifts. Discover how these factors could influence your next move.
Existing Home Sales See Modest Rise Amidst High mortgage Rates
Existing home sales experienced a slight uptick in May, according too the National Association of Realtors. Sales rose 0.8% from April to a seasonally adjusted annual rate of 4.03 million units. This defied predictions from housing analysts who anticipated a 1% decrease.However, sales remained 0.7% lower than in May of the previous year.
The Northeast saw the most notable increase in sales, jumping 4.2% month-to-month. The Midwest and south also experienced gains, while the West, the nation’s most expensive region, saw a decline of 5.4%.
Lawrence Yun,NAR’s chief economist,attributed the subdued market to high mortgage rates. “The relatively subdued sales are largely due to persistently high mortgage rates,” Yun said. He added, “Lower interest rates will attract more buyers and sellers to the housing market.” Yun anticipates increased home sales nationwide if mortgage rates decrease in the latter half of the year, driven by strong income growth, healthy inventory, and a record number of jobs.
The slight sales increase coincided with a significant rise in available homes.At the end of May, 1.54 million units were on the market, a 20% increase from the previous year. This represents a 4.6-month supply at the current sales pace, which remains historically low.
Despite increased inventory, prices remain elevated. The median price of an existing home in May was $422,800,a 1.3% increase year-over-year and a record high for the month.
Demand continues to outstrip supply, with 28% of homes selling above list price, up from 18% the previous month but slightly down from 30% in May 2024.
Sales were stronger in the higher end of the market, but fell in the $1 million-plus range compared with a year ago. The only price range where they rose was in the $750,000 to $1 million range, which saw a relatively small increase of 1%, NAR said.
“The upper end market is showing no difference compared to other price points. For the past 20 months we have seen the upper end outperforming, but that is no longer the case,” Yun said.
Homes are staying on the market longer, averaging 27 days compared to 24 days a year ago. First-time buyers accounted for just 30% of purchases, down from 31% last year. All-cash transactions increased to 27% of all sales.
What’s next
Economists are closely watching mortgage rates and inventory levels to gauge the future direction of the housing market. A sustained drop in mortgage rates could spur increased activity, while continued inventory growth could moderate price increases.