Existing-home sales rose slightly overall in May. Sales rose in the South and West but fell in the Northeast and Midwest.
The National Association of Realtors® reports Existing-Home Sales Edged Higher by 0.2% in May
Key Highlights
- Existing-home sales recorded a minor gain of 0.2% in May to a seasonally adjusted annual rate of 4.30 million.
- Sales retreated 20.4% from one year ago.
- The median existing-home price3 for all housing types in May was $396,100, a decline of 3.1% from May 2022 ($408,600). Prices grew in the Northeast and Midwest but fell in the South and West.
- Total housing inventory registered at the end of May was 1.08 million units, up 3.8% from April but down 6.1% from one year ago (1.15 million).
- Unsold inventory sits at a 3.0-month supply at the current sales pace, up from 2.9 months in April and 2.6 months in May 2022.
- All-cash sales accounted for 25% of transactions in May, down from 28% in April and identical to one year ago.
- Individual investors or second-home buyers, who make up many cash sales, purchased 15% of homes in May, down from 17% in April and 16% the previous year.
Existing Home Sales Seasonally Adjusted
Existing Home Sales Supply
Existing Home Sales Long Term
Transaction Crash
Existing home sales have crashed to a level seen in the mid 1990s. Prices have not crashed but transactions have.
People who want to move are effectively trapped in their houses because they do not want to trade a sub-3% mortgage for a 6.5% mortgage.
The bidding wars we do see are from people who are price insensitive. They make for amusing anecdotes but the above chart shows the real picture.
This crash is likely to last longer because intertest rates are likely to stay higher for longer because the Fed fears stoking more inflation.
Home sales mean appliance sales, new furniture, cabinets, new carpet, landscaping, etc. Who doesn’t spend a lot more money when they move into a new home?
Mortgage Rate
The current average mortgage rate according to Mortgage News Daily is 6.90%.
That is not a rate that will encourage buying.
Case Shiller Home Price Index
Case-Shiller Home Prices Unexpectedly Rise Adding Interest Rate Pressure on the Fed
On May 30, I commented Case-Shiller Top City Home Prices Decline From Year Ago for the First Time Since May 2012
Case-Shiller Index Chart Notes
- Home prices have peaked this cycle, except Chicago, but the decline is certainly tiny compared to the run up.
- There is a two-month lag in reporting. The latest report is for March and that represents sales primarily made in January and February.
- Declines will accelerate but not fast enough to revive a housing market that has soured dramatically.
Percent Decline From Peak
Financial Stress
Note that 70 Percent of Americans are Financially Stressed, 58 Percent Live Paycheck to Paycheck
The naïve view is that housing cannot crash unless prices crash. The reality is transactions have crashed, and weak home sales portend a weak economy for a long time.
For further discussion, please see The Starter Home Is No More, Even in Second Tier Markets
Fed Chair Jerome Powell has admitted as much.
The lower housing inventory is helping the home builders, despite the interest rate rise.
wonderful analysis mish. hat tip. i think a ticking time bomb is also insurance rates, which can force sellers. we are experiencing a crash, no doubt. due to the items you outline this will probably take a good 5 years to play out. maybe longer. family changes….divorce, jobs, deaths, insurance, crime, and other reasons eventually force people to sell.
I was replying to John above: “ LONGER AVAILABLE” notices on some of my list on several Real Estate sites in the last two months. But usually within 1-2 weeks they are back up, with most prices on them lowered..”
In my area in S OR getting a lot of notices “PENDING TO BE SOLD” or “NO LONGER AVAILABLE” notices on some of my list on several Real Estate sites in the last two months..
But usually within 1-2 weeks they are back up, with most prices on them lowered..
So should take these numbers with a great deal of skepticism!!!
What I see on the Redfin daily feed does not match up with their charts. The feed is new listings, price drops and ‘back on market’s about 4 to one to the pendings. Sales are fairly infrequent, but usually for at, over, or a little under asking.
I don’t know what to make of it. I think I’m looking at crap data.
I figure a lot of people are retiring are moving west/south and do not need a mortgage.
I wonder why all the sales in your area are failing – people who need a mortgage should be pre-approved.
Just sold my house. 5% over asking, with no inspection, and a free 3-week rent back to give me time to move. The reason was that the buyers had missed out on 4 previous houses by getting outbid. Hopefully they will enjoy the house like we did!
My guess is next month it gets adjusted down to a drop from April.