ARLINGTON, Va.—Existing home sales fell 3.4% in May to a seasonally adjusted annualized rate of 5.41 million units, representing an 8.9% decrease in sales compared to 2021.
“Existing home sales fell for the fourth straight month in May,” NAFCU Chief Economist and Vice President of Research Curt Long. “While the recent trend has been poor, it is helpful to keep things in perspective.
“Sales in May still equaled average monthly sales over the 12 months leading up to COVID-19,” added Long. “It is only in the wake of the extraordinarily high sales rate during the pandemic that housing demand seems to be cratering. By most measures, the market remains extremely tight.”
Slightly More Supply…
Based on current month sales, there were 2.6 months of supply in May, slightly up from 2.2 months in April, with analysts considering six months of inventory a rough balance between supply and demand.
The data show sales fell in most regions last month, with the Midwest and West falling by 5.3%, followed by a 2.8% decline in the South. Sales in the Northeast grew by 1.5%.
Of note, the median existing-home price, non-seasonally adjusted, jumped in April to $391,200, which is 14.9% higher than last year.
…But Even More Demand
“The National Association of Realtors reports that the average home stayed on the market for just 16 days in May, down by a day from the prior month,” noted Long. “Demand is still outstripping supply, although the slower sales pace is helping matters. Inventory levels have risen from 1.8 months of sales in January to 2.6 months in May. That is still a far cry from the six months of inventory typical of a balanced housing market. Sellers may be waiting to see whether the current rate environment will hold.
"For the time being, NAFCU expects home sales to continue to slide as rate-sensitive buyers and sellers wait on the sidelines,” concluded Long.