Existing Homes Sales Fall, but Prices Continue Record-Breaking Surge
June 21, 2022
U.S. home prices continued their rapid climb in May with the median price exceeding $400,000 for the first time, even as sales activity slowed amid higher mortgage rates.
The U.S. housing market has faced several headwinds in recent months. The Federal Reserve’s inflation-combatting rate hikes have sent mortgage rates soaring. Stocks have entered a bear market, consumer sentiment has plummeted, and economists are warning that a recession may be on the horizon.
Despite all this, demand continues to exceed historically low levels of available inventory, driving prices higher. The median price of an existing home climbed 14.8% in May from a year earlier, climbing to $407,600, a record high in data that goes back to 1999.
The combination of rapidly climbing prices and surging mortgage rates is pricing many prospective buyers out of the market and cooling the pace of sales. Sales of existing homes fell for a fourth consecutive month in May, declining 3.4% from the month prior to a seasonally adjusted annual rate of 5.41 million, the weakest since June 2020. May’s sales were 8.6% lower than a year earlier.
Even as sales continue to slow, economists expect home prices to continue climbing. Economists at Fannie Mae expect year-over-year price growth of around 5% by the end of the year.