Existing-home sales fell for the second straight month in May and slid 3 percent year over year, according to the existing-home sales data released by the National Association of Realtors (NAR) on Wednesday.
On a month-over-month basis, sales decreased 0.4 percent to a seasonally adjusted annual rate of 5.43 million.
“Closings were down in a majority of the country last month and declined on an annual basis in each major region,” said Lawrence Yun, Chief Economist at NAR.
One of the reasons, experts believe, is the uncertainty around home prices and rates that are prompting homeowners to stay longer in their homes.
“Historically, the rapid growth in home prices we are seeing would have enticed more move-up buyers into the housing market. But we have not seen that this cycle,” said Tian Liu, Chief Economist at Genworth Mortgage Insurance. “Existing homeowners are staying in their homes longer, and as a result, we have not seen an increase in repeat buyers over the past three years.”
“REALTORS in many parts of the country say their seller clients are dealing with a seesaw of emotions when deciding to put their home on the market,” said Elizabeth Mendenhall, President NAR, and CEO of RE/MAX Boone Realty. “While they’re thrilled that they will immediately find multiple buyers interested in their listings, many fear they’ll have extreme difficulty finding another home to buy.”
Despite rising housing starts and completions, inventory shortage and budgets continue to constrain potential homebuyers, according to Yun. “Incredibly low supply continues to be the primary impediment to more sales, but there’s no question the combination of higher prices and mortgage rates are pinching the budgets of prospective buyers, and ultimately keeping some from reaching the market,” he said.
NAR reported that median existing-home prices for all housing types were at an all-time high of $264,800 in May, indicating an increase of 4.9 percent from the same period last year. Total housing inventory during the month climbed 2.8 percent to 1.85 million existing homes available for sale. Despite this increase, NAR said, the inventory for sale is “still 6.1 percent lower than a year ago and has fallen year-over-year for 36 consecutive months.”
“Inventory coming onto the market during this year’s spring buying season–as evidenced again by last month’s weak reading–was not even close to being enough to satisfy demand,” Yun said.