The housing market displayed a slowdown in sales but a rise in prices in May, according to a new report by the National Association of Realtors (NAR). Sales of existing homes fell by 0.7 percent month-over-month and 2.8 percent year-over-year, despite an increase in listings. The annual pace of home sales in May slowed to 4.11 million. 
High mortgage rates contribute significantly to the sluggish sales figures. Although rates have remained below the 8 percent mark briefly seen in October 2023, they are still hovering around 7 percent. As of June 19, the average rate on a 30-year fixed-rate loan was 7.03 percent, according to Bankrate’s most recent survey of large lenders. Combined with record-high prices — the median home price in May hit a new all-time high — affordability challenges remain daunting for homebuyers.
“The fate of the housing market in the coming months will be dictated in part by the direction of mortgage rates, as well as the health of the broader economy,” says Mark Hamrick, Bankrate’s senior economic analyst. “The market could benefit from a combination of tailwinds if they were to develop and are sustained.”
Sales Trends and Regional Differences
The count of existing-home sales includes all completed resales, encompassing single-family houses, condos, townhouses, and co-ops. According to NAR, the number of sales nationally fell 2.8 percent year-over-year to an annual pace of 4.11 million transactions in May 2024. While the annual pace of existing home sales increased at the beginning of 2024, it remains far below typical levels.
Regionally, May sales saw the most significant drop in the South, down 5.1 percent year-over-year and 1.6 percent from April. In the Northeast, sales were down 4.0 percent from last year and flat month-over-month. The West experienced a 1.3 percent drop from last year and remained flat from the previous month. The Midwest was the only region to see a rise, remaining flat from April but up 1.0 percent from May of last year.
Properties typically remained on the market for 24 days in May, down slightly from 36 days in April. However, this is an increase from May 2023, when homes were on the market for just 18 days. Selling times are a crucial measure, especially during the spring selling season.
Rising Prices and Affordability Challenges
The nationwide median sale price for existing homes in May was $419,300, up 5.8 percent from last year and the highest price NAR has ever recorded. This marks the 11th consecutive month of year-over-year price increases. The previous home-price record was set in June 2022, with a median price of $413,800.
“Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers,” NAR Chief Economist Lawrence Yun stated. “The mortgage payment for a typical home today is more than double that of homes purchased before 2020. Still, first-time buyers in the market understand the long-term benefits of owning.” First-time homebuyers made up 31 percent of sales in May, down from 33 percent in April but up from 28 percent in May of last year.
“The record high median price just underscores that homeownership is slipping further away from middle- and lower-income Americans,” said Robert Frick, corporate economist with Navy Federal Credit Union.
Regional Price Increases
The median price of existing homes has risen sharply since the pandemic. All four geographic regions experienced annual price increases in May. The West had the highest median price at $632,900, up 5.5 percent from a year ago. The Northeast saw a 9.2 percent increase to $479,200. The South’s median price rose 3.6 percent to $374,300, and the Midwest’s median rose 6.4 percent to $317,100.
Inventory and Future Prospects
Total housing inventory stood at 1.28 million units at the end of May, a 6.7 percent increase from April and an 18.5 percent jump from a year ago. Despite this improvement, it represents only a 3.7-month supply, still short of the five to six months typically required for a balanced market.
The sharp rise in mortgage rates seen last fall has kept many homeowners from selling, as those who locked in rates at 3 percent years ago are not keen on moving with current rates more than double that. Rates may not dip significantly anytime soon.
However, increased inventory provides hope for the future. “Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions,” said Yun. “Eventually, more inventory will help boost home sales and tame home price gains.”