July 20, 2024

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Home prices hit record high in May as sales stall

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Homes in the Issaquah Highlands area of Issaquah, Washington, US, on Tuesday, April 16, 2024. 

David Ryder | Bloomberg | Getty Images

Sales of previously owned homes are sitting at a 30-year low, and didn’t move much in May as prices hit a new record and mortgage rates remain high.

So-called existing home sales in May were essentially flat, down 0.7% from April to a seasonally-adjusted, annualized rate of 4.11 million units, according to the National Association of Realtors. Sales fell 2.8% from May of last year.

This count of closed sales is based on contracts likely signed in March and April. The sluggish sales pace came as rates took a big leap in April.

The average rate on the popular 30-year fixed loan started the month just below 7% and then rose to just over 7.5% by mid-April, before settling back slightly in May, according to Mortgage News Daily. That rate is now right around 7%.

“Home sales refuse to recover,” said Lawrence Yun, chief economist for the NAR. “I thought we would see a recovery this spring. We are not seeing it.”

Sales were unchanged month-to-month in all regions except that South, where they fell 1.6%.

The biggest change in May is that the inventory of homes for sale jumped, up 6.7% month-to-month and 18.5% higher than May of last year. At the current sales pace, there is now a 3.7-month supply. While inventory is gaining, it is still very low given demographics and demand.

“Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months. Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions,” Yun added.

Record prices

That demand continues to push prices higher. The median price of an existing home sold in May was $419,300, a record high price in the Realtors’ recording and up 5.8% year over year. The gain was the strongest since October 2022. Prices gained in all regions.

The Realtors noted in the release that the mortgage payment for a…

2024-06-21 10:00:01

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