Sales of existing homes slowed slightly in May, held back by low supply and rapidly rising prices in a pattern that has become familiar lately.
Home sales in May were down 0.9% compared to the previous month—the fourth straight month of declines, the National Association of Realtors said in its monthly report Tuesday. Inventory increased slightly from the month before, improving to a 2.5-month supply compared to 2.4 months in April, but still near record lows. And the median sale price of homes rose almost $10,000 to $350,000, a 2.8% increase.
Residential real estate sales have been strong amid the pandemic and the recovery, driven by low mortgage rates and increased demand from work-at-home employees eager for more space. Although sales have slowed lately, down to an annualized rate of 5.8 million from their October peak of 6.7 million, they are still above the 5.3 million-a-year pre-pandemic rate seen in 2019 and 2018. The low supply of homes and continued strong demand have sent prices skyward and made for an extreme seller’s market.
“Homeowners wanting that move-in ready/farmhouse/colonial/Cape Cod/contemporary/mid-century modern-style home are put off by surging prices, lack of supply, and surging prices,” said Jennifer Lee, senior economist at BMO, in a commentary. “Oh, did I mention surging prices?"
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