OAN’s James Meyers
10:24 AM – Friday, June 21, 2024
For the third straight month, sales of previously occupied U.S. homes fell in May as increasing mortgage rates and record-high prices discourage many potential homebuyers during what’s typically the housing market’s busiest period of the year.
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Existing home sales fell 0.7% last month from April to a seasonally adjusted annual rate of 4.11 million, the National Association of Realtors (NAR) said in a statement on Friday.
Additionally, sales also dropped 2.8% in comparison to May 2023, last year. The latest sales still came just higher than the 4.07 million pace economists predicted, according to FactSet.
“I thought that we would actually see a recovery this spring —- we are not seeing it,” said Lawrence Yun, the NAR’s chief economist.
Meanwhile, prices on homes increased again for the eleventh month in a row. The national median sales price rose 5.8% from a year earlier to $419,300, an all-time high on records going back to 1999. The latest data also shows it’s up a staggering 51% from five years ago.
Despite the decrease of sales, home prices still rose and the supply of properties on the market reached the highest level in four years.
“It’s somewhat of a strange phenomena,” Yun said. “We had low home sales activity, prices are hitting record highs and homes look like they’re still getting multiple offers.”
The U.S. housing market has slowed, dating back to a slump in 2022 when mortgage rates began to rise from pandemic-era lows.
Furthermore, sales of homes dropped dramatically to a 30-year low last year as the average rate on a 30-year mortgage surged to a 23-year high of 7.79%, according to mortgage expert Freddie Mac.
Meantime, the average rate on a 30-year mortgage has stayed around 7% this year, which comes as a bit of a surprise due to the fact that rising inflation has forced the Federal Reserve to keep its short-term rate at the highest level in more than 20 years.
The increased mortgage rates are keeping many homeowners who bought or refinanced more than two years ago from selling now due to the possibility of losing their fixed rate mortgages below 3% or 4%.
According to Realtor.com, at the end of 2023, over 50% of homes with a mortgage had a rate that was 4% or lower, and 87% had a rate at 6% or lower.
Data also showed that there were an estimated 1.3 million unsold homes at the end of May, an increase of 6.7% from April and up 18.5% from May last year.
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