Due to the high mortgage interest rates, house prices in the United States reached a historic high in May, while existing home sales hit a 30-year low.
The latest data from the National Association of Realtors (NAR) in the United States shows that in May, as the median sales price reached a record high, the total sales of existing homes (including single-family homes, townhouses, condominiums, and cooperative apartments) decreased by 0.7% compared to April, with a seasonally adjusted annual sales rate of 4.11 million units. This is a 2.8% decrease compared to the same period last year.
In May, the median sales price for all types of homes was $419,300, setting a new record high and increasing by 5.8% compared to a year ago ($396,500). Housing prices in the four major regions of the United States (Northeast, Midwest, West, South) all saw an increase.
Lawrence Yun, Chief Economist of NAR, said, “The soaring home prices have widened the gap between existing homeowners and potential first-time buyers. Today, the mortgage payment for an average home is more than twice what it was for a home purchased before 2020.”
“Home sales are refusing to rebound. I thought we would see a recovery this spring, but we haven’t seen it,” Yun said.
The latest survey released by Freddie Mac, a U.S. housing mortgage financing institution, on Thursday, June 20, showed that the average rate for a 30-year fixed-rate mortgage had dropped slightly to 6.95% this week. Although this is lower than the peak of 7.79% in the fall, it is still significantly higher than the low of 3% during the pandemic.
The most significant change in May was a sharp increase in the inventory of homes for sale, up by 6.7% compared to the previous month and by 18.5% compared to the same period last year. At the current sales pace, there is a 3.7-month supply of homes. Despite the increase in inventory, considering the demographics and demand, the inventory remains low.
Yun of the National Association of Realtors stated, “Ultimately, more inventory will help drive home sales and moderate price increases in the coming months. The increased housing supply is good news for consumers who want to see more properties before making a purchase decision.”