Home sales slightly increased in May but remain far lower than a year ago as high interest rates and a lack of housing supply continue to limit activity, according to the National Association of Realtors.
According to the June 22 report, sales on single-family homes, townhomes, condominiums and co-ops increased by 0.2 percent from April to a seasonally-adjusted annual rate of 4.30 million. On a year-over-year basis, sales fell 20.4 percent from 5.40 million. Existing home sales in the Midwest fell by nearly 3 percent from April and 20.8 percent from the previous year. In the South region, existing home sales increased 1.5 percent from April but were still down 16.5 percent from May 2022.
“Newly constructed homes are selling at a pace reminiscent of pre-pandemic times because of abundant inventory in that sector,” said NAR Chief Economist Lawrence Yen. “However, existing-home sales activity is down sizably due to the current supply being roughly half the level of 2019.”
There was 1.08 million units of total housing inventory at the end of last month, up by nearly 4 percent from April but down from 6.1 percent from a year ago. Unsold inventory is at a three-month supply at the current pace of sales, up slightly from April. Properties were typically on the market for 18 days last month, down from 22 days in April.
There are signs that the mortgage market is improving. During the week ending June 16, the 30-year fixed mortgage rate fell to 6.73 percent from 6.77 percent. According to the Mortgage Bankers Association’s weekly Mortgage Applications Survey, applications increased 0.5 percent from the previous seven days.
“First-time homebuyers account for a large share of FHA purchase loans, and this increase is a sign that while buyer interest is there, activity continues to be constrained by low levels of affordable inventory,” said Joel Kan, deputy chief economist and vice president at the Mortgage Bankers Association.