The median sales price for a home in the U.S. climbed to $419,300 in May — the highest ever recorded and the 11th consecutive month of prices gains, according to the National Association of Realtors (NAR). That’s a 5.8% increase year over year when homes were selling at $396,500.
With home prices reaching record highs and interest rates elevated, homebuyers can expect to pay far more today for a typical home than just a few years ago, said NAR Chief Economist Lawrence Yun in a statement on Friday.
“Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers,” Yun said. “The mortgage payment for a typical home today is more than double that of homes purchased before 2020. Still, first-time buyers in the market understand the long-term benefits of owning.”
Sales of existing homes faltered in May. Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 0.7% month over month in May to a seasonally adjusted annualized rate of 4.11 million. That’s also down 2.8% from May 2023 when sales were at 4.23 million. Sales dropped the most in the South. All other regions, sales remained almost unchanged, according to NAR.
The inventory of unsold existing homes grew 6.7% in May to reach 1.28 million. That’s the equivalent of 3.7 months of supply, which is how long it would take for all homes on a market to be sold if no new units were added.
“Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months,” Yun said. “Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions.”
While there was more inventory, homes typically sold slightly quicker than the month before, remaining on the market for 24 days, according to NAR. That’s down from 26 days in April, but up from 18 days a year ago.
With sales slipping, all eyes will be on the Fed. Lower interest rates could attract homebuyers to the market later this summer and even in the fall, said Selma Hepp, CoreLogic’s chief economist.
“Home sales disappointed while mortgage rates remained over 7%,” Hepp said. “Still, if the Fed makes a move in September and mortgage rates fall some, the end of the year could be more promising for home sales.”
