After two consecutive monthly declines, existing home sales saw a modest increase in May as mortgage rates were relatively steady in April, according to the National Association of Realtors (NAR). However, elevated mortgage rates and limited inventory continued to weight on homebuyers. Low resale inventory and strong demand have contributed to the recent increases in new home sales.
Total existing home sales, including single-family homes, townhomes, condominiums and co-ops, rose 0.2% to a seasonally adjusted annual rate of 4.3 million in May. On a year-over-year basis, sales were 20.4% lower than a year ago.
The first-time buyer share rose to 28% in May, down from 29% in April but up from 27% in May 2022. The May inventory level measure increased to 1.08 million units but was down 1.15 million from a year ago.
At the current sales rate, May unsold inventory sits at a 3.0-months’ supply, up from 2.9-month last month but down from 2.6-months reading a year ago. This inventory level remains very low, compared to balanced market conditions (4.5 to 6 months’ supply), and illustrates the long-run need for more home construction.
Homes stayed on the market for an average of 18 days in May, down from 22 days in April but up from 16 days in May 2022. In May, 74% of homes sold were on the market for less than a month.
The May all-cash sales share was 25% of transactions, down from 28% last month and identical to a year ago. All-cash buyers are less affected by changes in interest rates.
The May median sales price of all existing homes was $396,100, down 3.1% from a year ago. The median existing condominium/co-op price of $353,000 in May, almost unchanged compared to a year ago.
Existing home sales in May were mixed across the four major regions. Sales in the South and West increased 1.5% and 2.6% in May, while sales in the Northeast and Midwest fell 2.0% and 2.9%. On a year-over-year basis, all four regions continued to see a double-digit decline in sales, ranging from 16.5% in the South to 25.5% in the West.
The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI fell 2.7% from 78.6 to 76.5 in May. On a year-over-year basis, pending sales were 22.2% lower than a year ago per the NAR data.
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