As home prices soared, existing home sales dipped for the fourth month in a row, according to the National Association of Realtors’ report for May.
Sales fell nearly 1 percent month-over-month to a seasonally adjusted annual rate of 5.80 million — approaching pre-pandemic levels. Sales were 44.6 percent higher than they were a year ago, about two months into the coronavirus scourge.
“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,” NAR’s chief economist Lawrence Yun said in a press release.
Only 1.23 million units were available at the end of May — a 7 percent increase from April but down 20.6 percent from a year ago, when 1.55 million homes were on the market.
That drove up the median existing home price for single-family homes, townhomes, condominiums and co-ops to $350,300 in May, a record year-over-year increase of 23.6 percent.
First-time buyers accounted for just 31 percent of sales, down from 34 percent last year. Rising home prices and tighter lending contributed to the drop.
But those who can afford to buy homes are snatching them up faster than they were a year ago. Eighty-nine percent of all homes sold last month were taken off the market in less than a month, according to the report. Homes generally spent about 17 days on the market, down from 26 a year earlier.
Individual investors and second-home buyers purchased 17 percent of homes in May, a tick up from 16 percent last year. All cash sales accounted for 23 percent of transactions, down by a quarter from the figure by a quarter but 17 percent more than the share of cash sales last year.
The median existing single-family home price was $356,600 in May, up 24.4 percent from last year. Single-family home sales fell to a rate of about 5.1 million, down 1 percent from April and up 39.2 percent from a year ago.
The median price for a condo was $306,000 in May, a year-over-year increase of 21.5 percent. Condo and co-op sales had a seasonally-adjusted annual rate of 720,000 units, the same as in April but a 100 percent increase from last year.
Of the country’s four major regions, only the Midwest recorded a month-over-month increase in home sales. Sales there rose 1.6 percent to an annual rate of 1.3 million, a 27.2 percent increase from last year.
The median price of a Midwestern home also increased annually, by 18.1 percent to $268,500.
Foreclosures and short sales represented less than 1 percent of sales in May, down from 3 percent last year — no surprise, given rising home prices, forbearance programs and foreclosure moratoriums.
The average commitment rate for a 30-year conventional fixed rate mortgage was 2.96 percent in May, down from 3.06 percent in April, according to Freddie Mac.