May home sales barely move as high mortgage rates, prices, weigh on housing market

NEW YORK -- Sales of antecedently occupied U.S. homes edged higher successful May, arsenic stubbornly high owe rates and rising prices made homebuying little affordable adjacent arsenic the inventory of properties connected the marketplace continued to increase.

Existing location income roseate 0.8% past period from April to a seasonally adjusted yearly complaint of 4.03 cardinal units, the National Association of Realtors said Monday.

Sales fell 0.7% compared with May past year. The latest location income fell topped the 3.95 cardinal gait economists were expecting, according to FactSet.

“The sluggish income enactment 1 tin property fundamentally to affordability,” said Lawrence Yun, NAR’s main economist.

Home prices accrued connected an yearly ground for the 23rd consecutive month, though the complaint of maturation continued to slow. The nationalist median income terms roseate 1.3% successful May from a twelvemonth earlier to $422,800, an all-time precocious for the period of May.

The U.S. lodging marketplace has been successful a slump since aboriginal 2022, erstwhile owe rates began to ascent from pandemic-era lows. Home income fell past twelvemonth to their lowest level successful astir 30 years.

The mean complaint connected a 30-year owe has remained comparatively adjacent to its precocious truthful acold this twelvemonth of conscionable supra 7%, which it acceptable successful mid-January, according to owe purchaser Freddie Mac. The debased constituent for this twelvemonth arrived 5 weeks ago, erstwhile the mean complaint concisely dropped to 6.62%. Last week, it averaged 6.81%.

Homes purchased past period apt went nether declaration successful April and May, erstwhile the mean complaint connected a 30-year owe ranged from 6.62% to 6.89%.

High owe rates, which tin adhd hundreds of dollars a period successful costs for borrowers, stay a cardinal affordability hurdle for galore would-be homebuyers. Years of soaring location prices person helped enactment homeownership retired of reach. The median U.S. location income terms is up 52% since May 2019, portion the U.S. median yearly income has risen 30% successful the aforesaid period, Yun noted.

While terms maturation has slowed, elevated owe rates and rising prices are forcing prospective homebuyers to prevention much for a down payment. In May, buyers needed an yearly income of $91,960 to spend a emblematic location with a 20% down payment, oregon astir 87% much than successful May 2019, according to Realtor.com.

Home shoppers who tin spend to bargain astatine existent owe rates benefited from a wider enactment of properties connected the market.

There were 1.54 cardinal unsold homes astatine the extremity of past month, a 6.2% summation from April, and 20.3% higher than May past year, NAR said. That’s inactive good beneath the astir 2 cardinal homes for merchantability that was emblematic earlier the pandemic, however.

May’s month-end inventory translates to a 4.6-month proviso astatine the existent income pace, up from a 4.4-month gait astatine the extremity of April and 3.8 months successful May past year. Traditionally, a 5- to 6-month proviso is considered a balanced marketplace betwixt buyers and sellers.