Existing-home sales continued their decline in May, falling for the fourth consecutive month, the National Association of Realtors said today. Month-over-month sales declined in three out of four major U.S. regions, while year-over-year sales slipped in all four regions, the NAR said.
Total existing-home sales — completed transactions that include single-family homes, townhomes, condominiums and co-ops — fell 3.4% from April to a seasonally adjusted annual rate of 5.41 million in May. Year-over-year, sales fell 8.6% from 5.92 million in May 2021.
"Home sales have essentially returned to the levels seen in 2019 — prior to the pandemic — after two years of gangbuster performance," said NAR Chief Economist Lawrence Yun. "Also, the market movements of single-family and condominium sales are nearly equal, possibly implying that the preference towards suburban living over city life that had been present over the past two years is fading with a return to pre-pandemic conditions."
Total housing inventory registered at the end of May was 1.16 million units, an increase of 12.6% from April but a 4.1% decline from last year (1.21 million),the NAR said. Unsold inventory sits at a 2.6-month supply at the current sales pace, up from 2.2 months in April and 2.5 months in May 2021.
"Further sales declines should be expected in the upcoming months, given housing affordability challenges from the sharp rise in mortgage rates this year," Yun said. "Nonetheless, homes priced appropriately are selling quickly and inventory levels still need to rise substantially — almost doubling — to cool home-price appreciation and provide more options for home buyers."
The median existing-home price for all housing types in May was $407,600, up 14.8% from May 2021 ($355,000), as prices increased in all regions, the NAR reported. This marks 123 consecutive months of year-over-year increases, the longest streak on record.
Properties typically remained on the market for 16 days in May, down from 17 days in April and 17 days in May 2021. Of homes sold in May 2022, 88% were on the market for less than a month.
First-time buyers were responsible for 27% of sales in May, down from 28% in April and from 31% in May 2021. NAR said its 2021 Profile of Home Buyers and Sellers — released in late 2021 — reported that the annual share of first-time buyers was 34%.
All-cash sales accounted for 25% of transactions in May, down from 26% in April but up from 23% in May 2021.
Individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes in May, down from 17% in April and from 17% last year.
Distressed sales — foreclosures and short sales — represented less than 1% of sales in May, essentially unchanged from April 2022 and May 2021.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.23% in May, up from 4.98% in April. The average commitment rate across all of 2021 was 2.96%.
Realtor.com's Market Trends Report in May shows that the largest year-over-year median list-price growth occurred in Miami (+45.9%), Nashville (+32.5%), and Orlando (+32.4%). Austin, Texas, reported the highest growth in the share of homes that had their prices reduced compared to last year (+14.7 percentage points), followed by Las Vegas (+12.3 percentage points) and Phoenix (+11.6 percentage points).
Single-Family and Condo/Co-op Sales
Single-family home sales declined to a seasonally adjusted annual rate of 4.8 million in May, down 3.6% from 4.98 million in April and from 7.7% a year ago. The median existing single-family home price was $414,200 in May, up 14.6% from the same month last year.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 610,000 units in May, down 1.6% from April and from 15.3% from one year ago. The median existing condo price was $355,700 in May, an annual increase of 14.8%.
"Declining home purchases means more people are renting, and the resulting rent price escalation may spur more institutional investors to buy single-family homes and turn them into rental properties — placing additional financial strain on prospective first-time homebuyers," said NAR President Leslie Rouda Smith, a Realtor from Plano, Texas, and a broker associate at Dave Perry-Miller Real Estate in Dallas. "To counter this trend, policymakers should consider incentivizing an inventory release to the market by temporarily lowering capital gains taxes for mom-and-pop investors to sell to first-time buyers."
Regional Breakdown
Existing-home sales in the Northeast climbed 1.5% in May to an annual rate of 680,000, falling 9.3% from May 2021. The median price in the Northeast was $409,700, up 6.7% from one year ago.
In the Midwest, existing-home sales dropped 5.3% from the previous month to an annual rate of 1.24 million in May, slumping 7.5% from May 2021. The median price in the Midwest was $294,500, up 9.5% from one year before.
Existing-home sales in the South declined 2.8% in May to an annual rate of 2,410,000, down 8.4% from the previous year. The median price in the South was $375,000, a 20.6% jump from one year ago. For the ninth consecutive month, the South recorded the highest pace of price appreciation in comparison to the other three regions.
Existing-home sales in the West, meanwhile, slid 5.3% from April to an annual rate of 1.08 million in May, down 10% from this time last year. The median price in the West was $633,800, an increase of 13.3% from May 2021.
The National Association of Realtors is America's largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.
