US home sales retreat in May, further slowdown expected in 2022


The average selling price exceeds $400,000 for the first time in history

According to the National Association of Realtors, US existing home sales fell for the fourth straight month in May 2022. Month-to-month sales declined in three of four major US regions, while year-to-year sales declined in all four regions.

Total existing home sales, completed transactions, which include single-family homes, townhomes, condos and coops, fell 3.4% from April to a seasonally adjusted annualized rate of 5.41 million in May. Year-over-year, revenue was down 8.6% (5.92 million in May 2021).

Lawrence Yun

“Home sales have essentially returned to 2019 levels — before the pandemic — after two years of gangbuster performance,” said NAR chief economist Lawrence Yun. “Additionally, market movements for single-family home and condominium sales are nearly the same, possibly indicating that the preference for suburban life over city life that has existed over the past two years is easing as conditions return to pre-pandemic conditions.”

The total housing stock registered at the end of May was 1,160,000 units, up 12.6% from April and down 4.1% from a year earlier (1.21 million). Unsold inventory at the current pace of selling is 2.6 months supply, up from 2.2 months in April and 2.5 months in May 2021.

“Further sales declines are expected in the coming months as housing affordability is challenged by the sharp rise in mortgage rates this year,” Yun added. “Nevertheless, reasonably priced homes are selling fast and inventories have yet to rise significantly – nearly doubling – to cool the rise in house prices and give home buyers more options.”

The median price for existing homes for all apartment types in May was $407,600, up 14.8% from May 2021 ($355,000) as prices rose across all regions. This marks 123 consecutive months of year-over-year increases, the longest-running streak on record.

Homes typically stayed on the market for 16 days in May, versus 17 days in April and 17 days in May 2021. 88 percent of homes sold in May 2022 were on the market for less than a month.

First-time home buyers accounted for 27% of sales in May, up from 28% in April and up from 31% in May 2021. NAR’s 2021 Profile of Home Buyers and Sellers — published in late 2021 — reported that the annual proportion of first-time buyers was 34 %.

Cash sales accounted for 25% of transactions in May, down from 26% in April and up from 23% in May 2021.

Individual investors, or second-home buyers, who make up many cash sales, bought 16% of homes in May, up from 17% in April and 17% in May 2021.

Distress sales — foreclosures and short sales — accounted for less than 1% of sales in May, essentially flat from April 2022 and May 2021.

According to Freddie Mac, the average commit rate for a 30-year conventional fixed-rate mortgage was 5.23% in May, up from 4.98% in April. The average commitment rate for the whole of 2021 was 2.96%.

Realtor.com’s May Market Trends Report shows that the largest year-over-year average list price increases were in Miami (+45.9%), Nashville (+32.5%) and Orlando (+32.4%). Austin saw the highest growth in the proportion of homes priced lower year-over-year (+14.7 percentage points), followed by Las Vegas (+12.3 percentage points) and Phoenix (+11.6 percentage points).

Sale of single-family houses and condominiums/cooperatives

Single-family home sales fell to a seasonally adjusted annual rate of 4.80 million in May, down 3.6% from April’s 4.98 million and down 7.7% from a year earlier. The median price for existing single-family homes in May was $414,200, up 14.6% from May 2021.

Existing condo and co-op sales recorded a seasonally adjusted annualized rate of 610,000 units in May, down 1.6% from April and down 15.3% from a year earlier. The median price of existing condos was $355,700 in May, up 14.8% annually.

“Declining home purchases mean more people are renting, and the resulting increase in rents may encourage more institutional investors to buy single-family homes and convert them into rentals — putting additional financial strain on potential first-time home buyers,” said NAR President Leslie Rouda Smith. “To counter this trend, policymakers should consider incentivizing the release of inventory into the market by temporarily reducing capital gains taxes for large investors to sell to first-time buyers.”

Regional Breakdown

Existing home sales in the Northeast rose 1.5% in May to an annualized rate of 680,000, down 9.3% from May 2021. The median price in the Northeast was $409,700, up 6.7% year-on-year.

Existing home sales in the Midwest fell 5.3% from the previous month to an annualized rate of 1,240,000 in May, down 7.5% from May 2021. The median price in the Midwest was $294,500, up 9.5% year over year.

Existing home sales in the South fell 2.8% in May to an annualized rate of 2,410,000, down 8.4% from a year earlier. The median price in the south was $375,000, up 20.6% year-on-year. For the ninth consecutive month, the South recorded the highest pace of price increases compared to the other three regions.

Existing home sales in the west fell 5.3% from the previous month to an annualized rate of 1,080,000 in May, down 10.0% from this time last year. The median price in the west was $633,800, up 13.3% from May 2021.

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