Existing home sales drop 20% from last year

As mortgage rates remain above early pandemic levels and housing inventory wanes, existing home sales are seeing a large drop.

Existing home sales fell 20.4 percent year-over-year in May, according to a report from the National Association of Realtors. The factors roiling the market also took a bite out of prices for existing homes, which notched its biggest annual decline in 11 years. 

Despite the significant annual drop, sales from the previous month marked a small increase. On a seasonally adjusted basis, existing home sales rose by 0.2 percent from April to May.

Inventory is one of the biggest factors plaguing existing home sales. Total housing inventory was down 6.1 percent year-over-year last month. Unsold housing inventory ended May with a three-month supply available.

Supply is roughly half the level it was at in 2019, which is restricting existing home sales, NAR chief economist Lawrence Yun noted. Mortgage rates, meanwhile, are approximately 1 point higher than they were a year ago, when the Federal Reserve was still early in its rate increase era.

The median sale price on an existing home sale last month was $396,100, down 3.1 percent from the previous year. Prices ranged in the regions, however, as they grew in the Northeast and Midwest while they fell in the West and South; all four saw year-over-year declines in total existing home sales.

Properties last month were on the market for an average of 18 days, available for four fewer days than the previous month. In May 2022, homes were selling a couple of days faster than they were last month, on average.

All-cash sales dropped down to 25 percent of transactions in May, the same as a year ago but down 3 percentage points from April. Investors — who are more prone to cash deals — kept up their retreat from the housing market, accounting for 15 percent of home purchases last month, down 1 percentage point from a year ago and two percentage points from April.

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