Sales of existing homes fell in May for the fourth straight month as a very low supply of homes on the market pushed prices to a new record high.
Existing home sales declined nine-tenths of a percentage point in May from April to a seasonally adjusted annualized rate of 5.8 million units, the National Association of Realtors said Tuesday. Economists had forecast an even steeper decline of 2.7 percent.
Sales were 44.6 percent above the year-ago level. But that comparison is misleading because much of the housing market was shutdown at the start of the pandemic last year.
The 5.8 million rate is slightly above the prepademic rate.
“Sales are essentially returning towards pre-pandemic activity,” noted Lawrence Yun, chief economist for the Realtors association. “Lack of inventory continues to be the overwhelming factor holding back home sales, but falling affordability is simply squeezing some first-time buyers out of the market.”
Some homeowners may be holding back on selling because of a lack of affordable alternatives. It does a homeowner no good to pocket a big gain on a sale if the next home is just as pricey.
Inventory is down to just 1.23 million homes for sale, a decline of 20.6% from a year ago. At the current sales pace that amounts to a 2.5-month supply.
The median price of an existing home in May was $350,300, the highest median price ever recorded. That is 23.6 percent above the May 2020 median price, the fastest ever price gain.
Properties typically remained on the market for 17 days in May, unchanged from April and down from 26 days in May 2020. Eighty-nine percent of the homes sold in May 2021 were on the market for less than a month.
Sales dropped in the Northeast, the West, and the South. Sales rose 1.6 percent in the Midwest, the NAR said.
Single-family home sales dropped to a seasonally-adjusted annual rate of 5.08 million in May, one percent below April’s level, and up 39.2% from one year ago. The median existing single-family home price was $356,600 in May, up 24.4 from a year ago.