WASHINGTON -- Sales of existing U.S. homes unexpectedly fell 0.4 percent in May, the second-consecutive monthly decline as a lack of inventory and elevated asking prices crimp the market, the National Association of Realtors reported Wednesday.
Homes sold at a seasonally adjusted annual pace of 5.43 million in May, the second straight monthly decline. Sales have tumbled 3 percent over the past year, despite steady job growth that has increased demand from would-be homebuyers as the unemployment rate has fallen to a multidecade low of 3.8 percent.
The housing market is caught in a vise of fewer sales listings and rising mortgage rates, both of which have made homeownership less affordable for many Americans.
The number of sales listings has dropped 6.1 percent over the past year to 1.85 million. That forced would-be buyers to act quickly and sign contracts on average in just 26 days. It also pushed up home values as the median sales price in May rose 4.9 percent from a year ago to $264,800.
Because of declining inventories, sales of homes worth less than $250,000 have declined over the past year. Sales of homes worth more than $1 million have surged 14.4 percent this year.
Adding to the pressure are rising mortgage rates. The average interest charged on a 30-year, fixed rate mortgage was 4.62 percent last week, up from 3.91 percent a year ago, according to mortgage buyer Freddie Mac.
Higher mortgage rates have the risk of further suppressing sales listings, even if the higher home values encourage some people to list their properties. The Realtors found that 15 percent of homeowners wouldn't list their properties for sale due to the increased mortgage costs, up from 11 percent in April.
Sales rose in the Northeast in May. But sales fell in the Midwest, South and West.
Existing-home sales account for about 90 percent of the residential real estate market and are calculated when a contract closes. New-home sales figures, due Monday from the government, are projected to to increase slightly. These numbers are tabulated when contracts get signed, making them a timelier indicator despite their smaller market share.
"Affordability challenges are hurting first-time buyers," Lawrence Yun, Realtors association chief economist, said at a press briefing accompanying the report. Higher prices are "terrific news for homeowners, but not all Americans are owners. They're feeling left out by the constant outpacing of home-price growth over wage growth."
"The housing affordability issue is becoming a crisis," he said.
Realtors "say their seller clients are dealing with a seesaw of emotions when deciding to put their home on the market," Elizabeth Mendenhall, association president and a Realtor in Columbia, Mo., said in a statement. "While they're thrilled that they will immediately find multiple buyers interested in their listing, many fear they'll have extreme difficulty finding another home to buy."
At the latest selling pace, supply would last 4.1 months, compared with 4 months in April; the association considers less than a five months' supply as consistent with a tight market
Single-family home sales decreased 0.6 percent last month to an annual rate of 4.81 million. First-time buyers made up 31 percent of sales, down from 33 percent a year ago.
Information for this story was contributed by Josh Boak of The Associated Press and by Katia Dmitrieva and Chris Middleton of Bloomberg News.
Business on 06/21/2018