Hanover Advisors Inc.
06/26/2024 | News release | Archived content
Home Prices Hit a Record High, Even as Sales Stall
Blog
Home Prices Hit a Record High, Even as Sales Stall
June 26, 2024
Sales of previously owned homes slowed to a 30-year low in May as record-high prices and surging mortgage rates kept buyers on the sidelines.
Existing home sales, which account for the vast majority of the housing market, fell 0.7% in May from the month prior to a seasonally adjusted annualized rate of 4.11 million units, according to the National Association of Realtors (NAR). On an annual basis, the month's sales were 2.8% lower than the same month last year.
The month's sales figures are based on the closing of contracts that were signed in April, when mortgage rates were surging. The average rate of a standard 30-year fixed-rate mortgage started the month just shy of 7%. Over the course of the month, mortgage rates jumped to higher than 7.5%.
Prospective buyers faced not only the prospect of more expensive borrowing with mortgage rates so high, but home prices continued to climb. The median price of an existing home sold in May was $419,300. That is a record-high price according to the NAR, and an increase of 5.8% year-over-year, the strongest annual increase since October 2022.
According to the NAR, the combination of higher mortgage rates and rapidly climbing home prices means that the mortgage payment for a typical home purchased today would be double what it was just five years ago.
One promising sign is that more sellers are putting their homes on the market. The inventory of homes for sale in May was up 6.7% from the month before and up 18.5% from a year earlier. At the current sales pace, the existing inventory represents a 3.7-month supply. While inventory is increasing, it remains low on a historic basis. A 6-month supply is generally considered to represent a balanced market between buyers and sellers.
Still, there is hope that increasing inventory will help boost sales and tame price gains in the coming months.