Both buyers and sellers alike are waving the white flag as home buying costs soar, sending transactions skidding off the road.
Transactions in May sank 1.7 percent from the previous month on a seasonally adjusted basis and 2.9 percent year-over-year, according to Redfin. The sales decline came as home prices hit another record high.
The sales volume was the third-lowest recorded by the brokerage in the past decade. The only months with a lower level of transactions were October — when mortgage rates hit a 23-year high — and the first month after the onset of the pandemic.
“Sales are sluggish because high home buying costs are making both house hunters and prospective sellers skittish,” Redfin senior economist Elijah de la Campa said.
Last month brought another record in the median sale price category. The median sale price was $439,716, a 1.6 percent jump from April and 5.1 percent rise year-over-year. With prices soaring, prospective buyers couldn’t find much relief in mortgage rates, which were up — marginally — from April, averaging 7.06 percent for a 30-year fixed-rate loan.
Anaheim recorded the largest median price gains from a year earlier, up 17.6 percent. Long Island’s Nassau County also saw a dramatic 14.2 percent rise, while Florida’s Cape Coral and Austin, Texas were among the few markets to see median prices go down.
One bright spot for buyers is the number of sellers chopping prices. Nearly 20 percent of homes for sale last month experienced at least one price cut, up from 13.2 a year earlier. Still, some markets are seeing bidding wars as buyers compete for the few homes available, pushing up prices.
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The supply side of the market — a problem intensified by low mortgage rates, which held back owners in the early days of the pandemic — showed small signs of improvement in May. New listings only rose a tad from April, but were up 8.8 percent year-over-year. Active listings followed a parallel path, rising 11.1 percent year-over-year. While that was the biggest gain of 2024 so far, active listings are still 25 percent under pre-pandemic levels.
San Jose ranked first for gains in both year-over-year new listings and year-over-year closed sales. The market also ranked second with 76.1 percent of homes sold above their final asking price.