Home sales are falling from their pandemic-fueled highs as home buyers tighten up their budgets. “Home sales have essentially returned to the levels seen in 2019—prior to the pandemic—after two years of gangbuster performance,” says Lawrence Yun, chief economist for the National Association of REALTORS®. Movement in both single-family and condo sales are nearly equal, Yun adds, “possibly implying that the preference toward suburban living over city life that had been present over the past two years is fading, with a return to pre-pandemic conditions.”
Total existing-home sales—completed transactions for single-family homes, townhomes, condos, and co-ops—dropped 3.4% month over month in May, reaching a seasonally adjusted annual rate of 5.41 million, according to NAR’s latest home sales report. Existing-home sales are down 8.6% compared to a year ago.
“Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year,” Yun says. “Nonetheless, homes priced appropriately are selling quickly, and inventory levels still need to rise substantially—almost double—to cool home price appreciation and provide more options for home buyers.”
Indeed, despite the decreases last month in home sales, prices remain strong. The median existing-home price exceeded $400,000 for the first time on record, reaching $407,600—up 14.8% from a median of $355,000 a year ago, NAR reports. Here are some additional key housing indicators from NAR’s May existing-home sales report.
- Days on the market: Eighty-eight percent of homes sold were on the market for less than a month. Properties typically remained on the market for 16 days, down from 17 days in April.
- Housing inventories: Total housing inventory at the end of May was 1.16 million units, up 12.6% from April but down 4.1% from a year ago. Unsold inventory nationally sits at a 2.6-month supply at the current sales pace.
- First-time buyers: First-time buyers accounted for more than a quarter—27%—of sales, down from 31% a year ago. Higher mortgage rates and home prices continue to press on first-time buyers’ budgets.
- All-cash sales: All-cash transactions accounted for a quarter of sales, up from 23% a year ago. Individual investors and second-home buyers, who tend to make up the bulk of cash sales, comprised 16% of transactions, down slightly from 17% a year earlier.
- Distressed sales: Foreclosures and short sales accounted for less than 1% of sales.
Here’s a closer look at how existing-home sales fared across the country in May:
- Northeast: Rose 1.5%, reaching an annual rate of 680,000. However, sales were down 9.2% from a year ago. Median price: $409,700, a 6.7% uptick from one year ago.
- Midwest: Fell 5.3% and reached an annual rate of 1.24 million. Sales were down 7.5% compared to a year earlier. Median price: $294,500, up 9.5% from a year ago.
- South: Dropped 2.8% in May and reached an annual rate of 2.41 million—down 8.4% from a year ago. Median price: $375,000, a 20.6% increase compared to a year ago.
- West: Fell 5.3% and reached an annual rate of 1.08 million, marking a 10% decline from a year earlier. Median price: $633,800, an increase of 13.3% from a year ago.