As mortgage rates remain above early pandemic levels and housing inventory wanes, existing home sales are seeing a large drop.
Existing home sales fell 20.4 percent year-over-year in May, according to a report from the National Association of Realtors. The factors roiling the market also took a bite out of prices for existing homes, which notched its biggest annual decline in 11 years.
Despite the significant annual drop, sales from the previous month marked a small increase. On a seasonally adjusted basis, existing home sales rose by 0.2 percent from April to May.
Inventory is one of the biggest factors plaguing existing home sales. Total housing inventory was down 6.1 percent year-over-year last month. Unsold housing inventory ended May with a three-month supply available.
Existing-home sales fell for the ninth month in a row in October as house prices rose for the 128th consecutive month, the longest streak of gains on record, the National Association of REALTORS® said.
Month over month, existing-home sales, which include single-family homes, townhomes, condominiums and co-ops, slid 5.9% to an annual rate of 4.43 million, which is 28.4% lower than the year before.
“More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher,” NAR chief economist Lawrence Yun said in a press release. “The impact is greater in expensive areas of the country and in markets that witnessed significant home-price gains in recent years.”
The median existing-home price for all housing types in October was $379,100, representing a 6.6% rise from the year before.
Total housing inventory at the end of October was 1,220,000 units, a 0.8% decrease on a month-over-month and year-over-year basis. At the current sales pace, unsold inventory represents a 3.3-month supply, up from 3.1 months in September and 2.4 months in October 2021.
“Deteriorating housing affordability and ongoing economic volatility continued to sideline buyers and push down sales activity in October as we enter the typically slower winter months and holiday season,” Compass president of national brokerage operations Neda Navab said. “There are a few factors that could improve affordability and bring buyers back: Robust wage increases for buyers; a broad decline in home prices; meaningfully lower mortgage interest rates; and/or a jump in inventory, especially of more-affordable homes.”
Properties typically remained on the market for 21 days in October, up from 19 days in September and 18 in October 2021. Sixty-four percent of homes sold in October were on the market for less than a month.
By property type, single-family home sales in October slid to a seasonally adjusted annual rate of 3.95 million, down 6.4% from 4.22 million in September and down 28.2% from a year earlier. The median existing single-family home price was $384,900, up 6.2% on a year-over-year basis.
Existing condominium and co-op sales came in at a seasonally adjusted annual rate of 480,000 units in October, down 2% from September and 30.4% compared to October 2021. The median existing condo price rose 10.1% year over year to $331,000.
Existing Homes Sales Declined Last Month
U.S. new-home sales dropped 12.6% in July compared to June, when sales fell 8.1%, while the median price of a new home sold during the month rose, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported.
Specifically, 511,000 new homes were sold in July, compared to 585,000 in June. The pace of newly built home sales in July was down 29.6% from the 726,000 homes sold a year before.
The median price of a new home sold in July was $439,400, up 5.9% from $414,900 in June and up 8.2% from $406,000 in July 2021.
The inventory of new homes for sale in July rose to 11.2 months from 9.1 months in June and 5.9 months in July 2021.
“There remains a structural and long-term shortage in the housing market, but higher rates and development costs have taken their toll on affordability and reduced demand,” First American deputy chief economist Odeta Kushi said. “The new-home market is very interest-rate sensitive, but new-home sales make up a small share of total sales, approximately 10%.”
By region, the number of new-construction homes sold was mixed, with month-over-month decreases of 20.6%, 13.3% and 12.1% in the Midwest, West and South, respectively, and a 13.3% jump in the Northeast.
“For those who are still motivated to buy, the market has become a less competitive space and buyers are not facing the bidding wars that characterized much of the earlier phases of the pandemic,” RCLCO Real Estate Consulting principal Kelly Mangold said. “However, underlying demand for for-sale new homes remains, and any adjustment is likely to be far less severe than what was experienced in 2008 because the for-sale market is still undersupplied compared to new household formation.”
Existing-home sales fell for the fifth consecutive month in June as homebuyer purchasing power was sapped by higher home prices and interest rates, the National Association of REALTORS® said.
At the same time, total housing inventory rose 9.6% on a month-over-month basis to 1.26 million units.
Total existing-home sales, which are completed transactions, including single-family homes, townhomes, condominiums and co-ops, slid 5.4% from May to a seasonally adjusted annual rate of 5.12 million in June. Year over year, sales volume was down 14.2% from 5.97 million transactions in June 2021.
“Falling housing affordability continues to take a toll on potential home buyers,” NAR chief economist Lawrence Yun said in a press release. “Both mortgage rates and home prices have risen too sharply in a short span of time.”
The median existing-home price for all housing types in June was $416,000, up 13.4% from a year before, as median prices rose in each region.
June’s unsold inventory represented a 3-month supply at the current sales pace, up from 2.6 months in May and 2.5 months last year.
Properties typically remained on the market for 14 days in June, the fewest days since NAR began tracking the metric in May 2011. Homes were on the market for 16 days in May and 17 days in June 2021. Eighty-eight percent of homes sold in June were on the market for less than a month.
“Finally, there are more homes on the market,” Yun said. “Interestingly though, the record-low pace of days on market implies a fuzzier picture on home prices. Homes priced right are selling very quickly, but homes priced too high are deterring prospective buyers.”
By property type, single-family home sales in June slid to a seasonally adjusted annual rate of 4.57 million, down 4.8% from 4.8 million in the previous month and down 12.8% from a year earlier. The median existing single-family home price was $423,300, up 13.3% on a year-over-year basis.
Existing condominium and co-op sales came in at a seasonally adjusted annual rate of 550,000 units in June, down 9.8% from May and 24.7% compared to June 2021. The median existing condo price rose 11.5% year over year to $354,900.
In June, first-time buyers were responsible for 30% of sales, up from 27% in May and down from 31% in June 2021, while individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes, equal to May and up from 14% in June 2021.
“We are now seeing some evidence of inventory levels starting to pick up across the country, but still consistently below pre-pandemic levels,” Keller Williams chief economist Ruben Gonzalez said. “It seems likely that we will return to a pace of home sales more consistent with pre-pandemic levels, but we also see long-term demographic trends which will continue to keep demand for homeownership growing over the next decade.”
Existing-home sales declined for the fourth month in a row in May, as the median price for existing homes hit another record high, the National Association of Realtors said.
Total existing-home sales, which are completed transactions including single-family homes, townhomes, condominiums and co-ops, dropped 0.9% from April to a seasonally-adjusted annual rate of 5.80 million in May. Year over year, however, sales were up 44.6% from 4.01 million in May 2020.
The median existing-home price for all housing types in May was $350,300, up 23.6% on an annual basis, as every region registered price increases. This is a record high and marks 111 straight months of year-over-year gains since March 2012, the NAR said in a press release.
Total housing inventory at the end of May stood at 1.23 million units, up 7% from April and down 20.6% from a year earlier. May’s inventory represents a 2.5-month supply at the present sales pace, slightly higher than April’s 2.4-month supply but down from 4.6 months in May 2020.
Properties typically remained on the market for 17 days in May, flat from April but down from 26 days in May 2020. Eighty-nine percent of homes sold in May were on the market for less than a month.
“Lack of inventory continues to be the overwhelming factor holding back home sales, but falling affordability is simply squeezing some first-time buyers out of the market,” NAR chief economist Lawrence Yun said in the release. “The market’s outlook, however, is encouraging. Supply is expected to improve, which will give buyers more options and help tamp down record-high asking prices for existing homes.”
By property type, single-family home sales dropped to a seasonally-adjusted annual rate of 5.08 million, down 1% from 5.13 million in April and up 39.2% from a year ago. The median existing single-family home price was $356,600, up 24.4% on a year-over-year basis.
Existing condominium and co-op sales came in at a seasonally-adjusted annual rate of 720,000 units, unchanged from April but up 100% from a year ago. The median existing condo price rose 21.5% year over year to $306,000 in May.