What goes up must come down? Home prices never got the memo
Published Date 6/24/2024
Existing-home sales prices climbed to a record high in May, as home buyers—also up against mortgage rates that were then above 7%—must continue digging deeper into their pockets.
Realtor Magazine’s Melissa Dittmann Tracey reports that the median existing-home sales price rose nearly 6% in May compared to a year ago, reaching $419,300, the highest price ever recorded. The Northeast saw the largest uptick in home prices, up 9.2% compared to a year ago.
While home prices rose, completed transactions on existing homes that include single-family homes, townhomes, condos and co-ops—fell slightly by 0.7% last month compared to April. It left home sales down 2.8% compared to a year ago, the National Association of Realtors latest home sales report shows.
“Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months,” says NAR’s Chief Economist Lawrence Yun. “Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions.”
So as you can see, not all the news is bad. Home buyers are finding more choices: Total housing inventory at the end of May was at 1.28 million, up 6.7% compared to the previous month and up 18.5% compared to a year ago.
Unfortunately, however, high home prices continue to press buyers against rising affordability woes according to Yun. “Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers. 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.”
First time buyers are on the move despite the challenges, comprising 31% of sales in May, up from 28% a year ago, NAR’s report shows. These newbies as well as other home seekers are facing increased competition from a growing share of all-cash buyers in the market, however, as all-cash sales accounted for 28% of transactions in May, up from 25% a year earlier, made up primarily of investors and second-home buyers.
Decision-making is no cakewalk in these days of rapid sales whenever a home hits the market. Buyers continue to have to make purchase decisions quickly, with properties typically having remained on the market for a mere 24 days in May.
Regional sales stats tell us sales held steady in the Northwest in May, remaining at an annual rate of 480,000, but down 4% compared to a year ago. Median price: $479,200, up 9.2% from a year ago.
The Midwest held steady compared to April, at an annual rate of 1 million, but prices are up 1% from a year earlier. Median price: $317,100, up 6.4% from May 2023.
The South saw a decline by 1.6%, settling at an annual rate of 1.87 million. Sales are down 5.1% from the previous year. Median price: $374,300, up 3.6% from a year ago.
And out West, existing-home sales held steady staying at an annual rate of 760,000. Sales are down 1.3% compared to a year earlier. Median price: $632,900, up 5.5% from May 2023.
RealtorMag, TBWS
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