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U.S. Existing Home Sales Show Another Steep Drop In May

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The National Association of Realtors released a report on Tuesday showing another steep drop in U.S. existing home sales in the month of May.

NAR said existing home sales plunged by 3.4 percent to an annual rate of 5.41 million in May after slumping by 2.6 percent to a revised rate of 5.60 million in April. Existing home sales fell for the fourth consecutive month.

Economists had expected existing home sales to tumble by 3.7 percent to a rate of 5.40 million from the 5.61 million originally reported for the previous month.

"Home sales have essentially returned to the levels seen in 2019 - prior to the pandemic - after two years of gangbuster performance," said NAR Chief Economist Lawrence Yun.

He added, "Also, the market movements of single-family and condominium sales are nearly equal, possibly implying that the preference towards suburban living over city life that had been present over the past two years is fading with a return to pre-pandemic conditions."

The report showed single-family home sales dove by 3.6 percent to an annual rate of 4.80 million, while existing condominium and co-op sales slid by 1.6 percent to a rate of 610,000.

Meanwhile, totaling housing inventory surged by 12.6 percent to 1.16 million units at the end of May from 1.03 million units at the end of April. Housing inventory is still down by 4.1 percent compared to a year ago.

The unsold inventory represents 2.6 months of supply at the current sales pace, up from 2.2 months in April and 2.5 months in May 2021.

NAR also said the median existing home price was $407,600 in May, up 3.1 percent from $395,500 in April and up 14.8 percent from $355,000 a year ago.

"Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year," Yun said.

He continued, "Nonetheless, homes priced appropriately are selling quickly and inventory levels still need to rise substantially - almost doubling - to cool home price appreciation and provide more options for home buyers."

On Friday, the Commerce Department is scheduled to release a separate report on new home sales in the month of May.

New home sales are expected to dip by 0.5 percent to an annual rate of 588,000 in May after plunging by 16.6 percent to a rate of 591,000 in April.

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