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Existing-home sales ticked up slightly from April to May but fell to a pace that’s even lower than the same time last year, according to new data released by the National Association of Realtors on Monday.
Existing-home sales dropped 0.7 percent compared to May 2024, to a seasonally adjusted annual rate of 4.03 million. Sales were 0.8 percent higher in the month than in April, NAR noted.
Inventory was 20.3 percent higher in May compared to a year earlier, NAR said, as the number of homes for sale rose to 1.54 million — or a 4.6-month supply.
“The relatively subdued sales are largely due to persistently high mortgage rates. Lower interest rates will attract more buyers and sellers to the housing market,” NAR Chief Economist Lawrence Yun said. “Increasing participation in the housing market will increase the mobility of the workforce and drive economic growth.”
It’s not clear just when mortgage rates might fall or what might cause them to drop.
President Donald Trump and Federal Housing Finance Administration Chairman Bill Pulte have been publicly calling on Federal Reserve Chair Jerome Powell to either cut rates or resign from his post before his term ends next year.
But it’s not clear that a drop in the federal funds rate, which can indirectly impact the rates for car loans and credit cards, would lead mortgage rates to fall from their current rate of 6.81 percent on average for a 30-year fixed. That’s up from 4 percent a decade ago, and from a record-low of 2.65 percent in January 2021.
Amid the ongoing high-rate environment, and with consumer sentiment low — just 26 percent of Americans believed May was a good time to buy a home — sales remained sluggish in much of the country in May.
The lower sales environment has dogged economists and real estate insiders who expected home sales to be higher this year than last, when sales fell to the lowest point in nearly 30 years.
Anywhere Real Estate dropped its earnings estimate for the second quarter of this year by up to 10 percent, saying a slower-than-expected sales environment has cut into its earnings.
NAR said in December that it expected mortgage rates to fall to 6 percent this year, a forecast that has proved increasingly difficult to get right. The trade group now says stubbornly high rates are weighing on the market.
“If mortgage rates decrease in the second half of this year, expect home sales across the country to increase due to strong income growth, healthy inventory, and a record-high number of jobs,” Yun said.
The sales of existing single-family homes rose 1.1 percent from April to May, while sales were down 2.7 percent for condos and co-ops.
Some markets were particularly strong, even when compared to last year, while others were sluggish.
Home sales were up 4.2 percent in the Northeast compared to a year ago, and prices rose 7.1 percent, NAR said.
Meanwhile, sales fell 6.7 percent in the western U.S. compared to a year ago while prices ticked up 0.5 percent.
Sales rose 1 percent in the Midwest and fell 0.5 percent in the South, NAR said.
Existing-home prices rose by 1.3 percent from a year ago, hitting $422,800 in May. That marked nearly two straight years of home price increases.
