Existing home sales dipped by 0.7% in May to a seasonally adjusted annual rate of 4.11 million, according to new data from the National Association of Realtors (NAR). Sales were down 2.8% from the 4.23 million recorded in May 2023.
As the sales level slipped, prices soared. The median existing-home price for all housing types in May was $419,300, the highest price ever recorded and a 5.8% spike from the $396,500 price in May 2023.
Sales were down despite a wider selection of homes to buy – the total housing inventory registered 1.28 million units last month, up 6.7% from April and 18.5% from one year ago (1.08 million). Unsold inventory was 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.
In the four major U.S. regions, sales slid month-over-month in the South but were unchanged in the Northeast, Midwest and West. Year-over-year, sales rose in the Midwest but fell elsewhere. All four regions registered price gains.
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. And individual investors purchased 16% of homes in May, identical to April and up from 15% in May 2023.
“Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months,” said NAR Chief Economist Lawrence Yun. “Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions.”
Separately, the Fannie Mae (OTCQB: FNMA) Economic and Strategic Research Group announced a downgrade of its total home sales forecast to 4.82 million in 2024, representing a modest 1.3% annual gain compared to the previously projected 2.8%.
“The economy appears to be slowing, and recent readings offer hope that inflation is cooling after progress on that front stalled in the first quarter – a trend that will likely need to be sustained for the Fed to feel comfortable cutting rates,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “Additionally, the labor market is showing signs of a gradual slowdown, with the unemployment rate creeping up to 4% in the June report. Unfortunately, we’re still not forecasting a ramp-up in housing activity, which will require some combination of continued household income growth, a further slowing of home price appreciation, or a decline in mortgage rates to bring affordability within range of many waiting first-time and move-up homebuyers.”
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