Slowdown in US Existing Home Sales Continues Through May 2024
Slowdown in US Existing Home Sales Continues Through May 2024
Existing home sales in the United States continued their downward trend in May 2024, marking the slowest May for sales since 2009. According to the National Association of Realtors (NAR), existing home sales in May fell 0.7% compared to May 2023. While sales saw a slight 0.8% monthly increase from April, this followed the slowest April for existing home sales in 16 years. In March, sales fell 5.9 percent to a seasonally-adjusted annual rate of 4.02 million units, a 2.4 percent decline year-over-year, representing the slowest March since 2009.
The NAR reported that the median price for existing homes sold in May 2024 was $427,800, a 1.3% increase year-over-year. For condos and co-ops, the median sales price was $371,300, up 0.7% from a year earlier. The median price in March was $403,700, a 2.7 percent increase year-over-year, the smallest gain since August. In March, the median price in the West was $621,200, up 2.6 percent year-over-year. Regional sales data from March showed decreases across the Northeast (2%), Midwest (5%), and South (5.7%). The West saw a 9.4 percent decrease, although this was the only region to show a year-over-year gain due to growth in the Rocky Mountain states.
Lawrence Yun, chief economist for NAR, attributed the sluggish sales activity to affordability challenges stemming from high mortgage rates. He noted that the monthly payment for a home at the median price has roughly doubled since before the COVID-19 pandemic, increasing from approximately $1,000 to over $2,000. Yun also stated that residential housing mobility is at historical lows. He further observed that while home prices continue to rise, the year-over-year price growth of 1.3% in May 2024 was the slowest since June 2023.
Inventory levels have increased. At the end of March, there were 1.33 million units for sale, an 8.1% increase from February and a 19.8% increase from a year earlier. By May, inventory was up more than 20% year-over-year, with the largest increases in the West and South. Redfin estimated that there are currently 34% more buyers than sellers in the U.S. overall, but that for condos, there are 83% more sellers than buyers. In March, all-cash sales constituted 26 percent of sales (down from 28 percent), while investor purchases represented 15 percent, and distressed sales (foreclosures and short sales) accounted for 3 percent (up from 2 percent a year earlier).
Sales activity, according to Yun, is currently running at 75% of pre-COVID levels. Potential buyers cited concerns about job security, high mortgage rates, stock market volatility, and general economic uncertainty as factors influencing their decisions. While the Federal Reserve held interest rates steady in its last meeting, it signaled the possibility of future rate cuts. Yun indicated that decreased mortgage rates in the latter half of the year, coupled with strong income growth, healthy inventory, and a high number of jobs, could lead to an increase in home sales.
In summary, the US existing home sales market remains sluggish in the first half of 2024, characterized by slower sales, increased inventory, and rising but decelerating home prices. Affordability challenges, primarily driven by high mortgage rates, are cited as the primary factor contributing to the slowdown. The market’s future trajectory remains contingent on factors such as future Federal Reserve actions and broader economic conditions.
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