Sales of existing homes rose just a bit in May, following two straight monthly declines, the National Association of Realtors said Thursday.
Sales were mixed among the four major U.S. regions, with the South and West posting monthly gains and the Northeast and Midwest seeing declines. All four regions experienced year-over-year sales declines.
Total existing-home sales — completed transactions that include single-family homes, townhomes, condominiums, and co-ops —rose 0.2% from April to a seasonally adjusted annual rate of 4.3 million in May. Year-over-year, however, sales dropped 20.4% from 5.4 million in May 2022.
Even though the increase was marginal, it followed a 3.4% decline in April and 2.4% drop in March.
"Mortgage rates heavily influence the direction of home sales," said NAR Chief Economist Lawrence Yun. "Relatively steady rates have led to several consecutive months of consistent home sales."
Danielle Hale, chief economist for Realtor.com, said the pace of home sales “continues to exceed the 4 million sales low reached in January, yet it still lags year-ago sales by a considerable 20.4%.”
The total housing inventory registered at the end of May was 1.08 million units, up 3.8% from April but down 6.1% from 1.15 million a year earlier. Unsold inventory was at a 3-month supply at the current sales pace, up from 2.9 months in April and 2.6 months in May 2022.
"Available inventory strongly impacts home sales, too," Yun added. "Newly constructed homes are selling at a pace reminiscent of pre-pandemic times because of abundant inventory in that sector. However, existing-home sales activity is down sizably due to the current supply being roughly half the level of 2019."
Hale said the dearth of newly listed homes has made it challenging for buyers to find a good match if their criteria are too specific. “Although total inventory in May was up 3.8% from April, it was down 6.1% from one year ago, and the number of newly listed homes fell 22.7% behind last May,” she said. “Nevertheless, a market rendered slightly less competitive amid high costs is opening doors for some buyers. The first-time buyer share dipped from April, but was up to 28% in May from 27% one year ago.”
The median existing-home price for all housing types in May was $396,100, a decline of 3.1% from $408,600 in May 2022. Prices grew in the Northeast and Midwest, but fell in the South and West.
Other Highlights
- Properties typically remained on the market for 18 days in May, down from 22 days in April but up from 16 days a year earlier. Of the homes sold in May, 74% were on the market for less than a month.
- First-time buyers were responsible for 28% of sales in May, down from 29% in April but up from 27% a year earlier.
- All-cash sales accounted for 25% of transactions in May, down from 28% in April and the same as a year earlier.
- Individual investors or second-home buyers, who make up many cash sales, purchased 15% of homes in May, down from 17% in April and 16% the previous year.
- Distressed sales — foreclosures and short sales —represented 2% of sales in May, virtually unchanged from last month and the prior year.
According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.69% as of June 15, down from 6.71% the previous week but up from 5.78% one year ago.
Single-Family, Condo/Co-op Sales
Single-family home sales dipped to a seasonally adjusted annual rate of 3.85 million in May, down 0.3% from 3.86 million in April and down 20% from the previous year. The median existing single-family home price was $401,100 in May, down 3.4% from May 2022.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 450,000 units in May, up 4.7% from April but down 23.7% from a year ago. The median existing condo price was $353,000 in May, nearly identical to the prior year ($353,100).
"A temporary capital gains tax reduction on a sale of investment property can lead to a boost in housing inventory, home sales, and the economy," said NAR President Kenny Parcell, a Realtor from Spanish Fork, Utah, and broker-owner of Equity Real Estate Utah. "Policymakers need to seriously consider the measure."
By Region
Existing-home sales in the Northeast fell 2% from April to an annual rate of 500,000 in May, down 25.4% from May 2022. The median price in the Northeast was $439,000, up 2.5% from one year ago.
In the Midwest, existing-home sales fell 2.9% from April to an annual rate of 990,000 in May, decreasing 20.8% from the previous year. The median price in the Midwest was $298,000, up 1.1% from May 2022.
Existing-home sales in the South grew 1.5% from April to an annual rate of 2.02 million in May, though that was still down 16.5% from a year earlier. The median price in the South was $361,400, down 2.7% from May 2022.
In the West, existing-home sales rose 2.6% from the previous month to an annual rate of 790,000 in May, down 25.5% from one year ago. The median price in the West was $596,500, down 5.7% from May 2022.
Hale added that, with fewer homeowners poised to become sellers in 2023, “buyers have a tough road ahead. Our revised 2023 outlook expects that there will be some positives, namely, a gradual decline in mortgage rates beginning midyear and a continued softness in home prices that will start to stabilize high housing costs. On net home sales are expected to tally roughly 4.2 million in 2023, their lowest annual total since 2012.”
