U.S. existing home sales fall for 3rd month in row amid higher prices, mortgage rates
Date
6/23/2024 5:11:41 AM
(MENAFN) In May, existing home sales in the United States experienced a third consecutive monthly decline, driven by record high prices and a resurgence in mortgage interest rates, which have deterred potential buyers from entering the market. The National Association of Realtors reported on Friday that home sales dropped by 0.7 percent to a seasonally adjusted annual rate of 4.11 million units. This decline was slightly above the expectations of economists polled by Reuters, who had predicted a decrease to 4.10 million units.
Year-over-year, home resales, which constitute a significant portion of U.S. home sales, fell by 2.8 percent in May. This downward trend in home resales coincided with a significant reduction in housing starts and building permits last month, indicating that the rise in mortgage rates from April to May has negatively impacted the momentum of the housing market recovery. Despite a strong performance in residential investment, which saw double-digit growth during the first quarter, the housing market has faced challenges due to fluctuating mortgage rates.
Data from Freddie Mac, a major mortgage lender, revealed that the average interest rate on a 30-year fixed mortgage climbed to a six-month high of 7.22 percent in early May, before dipping slightly to just under 7.0 percent by the end of the month. Regionally, sales fell by 1.6 percent in the densely populated South but remained unchanged in the Midwest, Northeast, and West, with the Midwest being one of the most affordable regions.
The available housing inventory saw a notable increase of 6.7 percent, reaching 1.28 million units last month. This supply level represents an 18.5 percent jump from the previous year. At the current sales pace, it would take 3.7 months to deplete the existing inventory of homes, up from 3.1 months a year ago. Typically, a supply range of four to seven months is considered a balanced market, reflecting a healthy equilibrium between supply and demand.
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