Home Prices Reach Record High as Sales Fall

Sales of previously owned homes fell in May for the third straight month as prices climbed to a record high, according to the National Association of Realtors (NAR).

The NAR reported existing home sales dropped 0.7% in May from April to an annualized rate of 4.11 million, the lowest level since January. They were down 2.8% from a year ago.

Median Home Price Climbs to Record $419,300

The group said that the median price jumped 5.8% from 2023 to $419,300, an all-time high. The rise marked the 11th consecutive month of year-over-year price hikes. 

NAR Chief Economist Lawrence Yun said soaring prices are “creating a wider divide between those owning properties and those who wish to be first-time buyers.”

The Federal Reserve’s interest rate hikes to tame inflation have also kept mortgage rates high, discouraging many potential buyers, with Yun adding that “The mortgage payment for a typical home today is more than double that of homes purchased before 2020.”

The average rate for a 30-year mortgage this week was 6.87%, according to Freddie Mac, well above a record low of 2.65% in 2021.

NAR Says Higher Inventories Could Help Tame Prices

The NAR noted inventories of unsold homes jumped 6.7% from the month before, and “eventually, more inventory will help boost home sales and tame home price gains in the upcoming months.”

Yun said that higher supply also “spells good news for consumers who want to see more properties before making purchasing decisions.”