For the third consecutive month, existing home sales fell in May as COVID-19 has made homebuying more challenging, according to the National Association of Realtors (NAR).
The number of homes sold last month slipped to 3.9 million, down from 5.3 million in May of last year, a nearly 27 percent decline. Each of the nation’s four regions saw double-digit year-over-year sales losses.
Northeast home sales fell 30 percent last month compared to a year ago. Sales were down 20 percent in the Midwest, and in the South, they dropped 25 percent from the same time one year ago. In the West, sales were off 35 percent from a year ago.
“Sales completed in May reflect contract signings in March and April during the strictest times of the pandemic lockdown, hence the cyclical low point,” said Lawrence Yun, NAR’s chief economist, in a statement.
While sales fell, the median existing home price in May for single-family homes, condominiums and townhouses rose 2.3 percent to $284,600 compared to May 2019, when the medium was $278,200. May’s national price increase represents 99 straight months of year-over-year gains, NAR data shows.
Real estate agents say prices continue to rise because there are so few homes for sale. “There is evidence that homebuyers came back in big numbers in May,” Danielle Hale, chief economist for Realtor.com, told CNBC. “However, these buyers are now confronting a familiar challenge: not enough homes for sale. Fortunately, shifting preferences and behaviors favoring the suburbs may better enable builders to build and buyers to find what they’re looking for.”
Housing inventory at the end of May totaled 1.55 million units, down 19 percent from one year ago. First-time buyers were responsible for 34 percent of sales in May, up 32 percent from a year ago.
“New home construction needs to robustly ramp up in order to meet rising housing demand,” Yun said. “Otherwise, home prices will rise too fast and hinder first-time buyers, even at a time of record-low mortgage rates.”
The disappointing sales come as the country is in the midst of the all-time lowest home loan interest rates. The rate for a 30-year, fixed-rate mortgage was 3.23 percent in May, according to Freddie Mac.