Pre-owned homes see sales bump, price drop
LOS ANGELES — Sales of previously owned U.S. homes edged higher in May and the national median sale price posted its biggest annual drop in more than a decade, even as the supply of available properties sank to an all-time low.
Home sales, excluding new homes, rose 0.2% last month from April to a seasonally adjusted annual rate of 4.3 million, the National Association of Realtors said Thursday. That’s slightly above what economists were expecting, according to FactSet.
Sales sank 20.4% compared with May last year. That marks 10 consecutive months of annual sales declines of 20% or more. The annual drop was steepest in markets across the West and Northeast, where sales slumped more than 25%.
The national median home price fell 3.1% from May last year to $396,100, the association said. The year-over-year decline is the biggest since December 2011, when the housing market was still on the mend following the mid-2000s housing bust.
The latest housing market figures are more evidence that even with prices declining after heading higher for more than a decade many house hunters are being held back by a persistently low inventory of homes for sale.
“There’s simply not enough inventory,” said Lawrence Yun, the association’s chief economist. All told, there were 1.08 million homes on the market by the end of May, an increase of 3.8% from April, but down 6.1% from a year earlier, the association said. That’s the fewest homes for sale on records going back to 1999, Yun said.
The number of homes on the market at the end of May amounts to a 3-month supply at the current sales pace, an improvement over the 2.9-months in April and 2.6 months in May last year. Still, in a more balanced market between buyers and sellers, there is a 5- to 6-month supply.
The shortage of homes for sale has kept the market competitive, driving bidding wars in many places, especially for the most affordable properties. Onethird of the homes purchased last month sold for more than their list price, Yun said.
Homes listed for sale in May typically sold within just 18 days, while 74% were on the market for less than a month, the NAR said.
The combination of high borrowing costs and intense competition for the most affordable homes on the market is keeping many first-time buyers on the sidelines. They accounted for 28% of home sales last month, down from 29% in April.
“First-time buyers (are) still struggling to get into the market,” Yun said.
While many homes are selling quickly after they hit the market, the dearth of properties for sale continues to be a drag on sales overall this year.
The U.S. housing market’s sales slump started a little more than a year ago, when the average rate on a 30-year mortgage began to climb from ultra-low levels as the Federal Reserve began raising its short-term rate in its fight against inflation.