Existing home closings saw a slight increase in May, rising 0.8% from April to an annual rate of 4.03 million units. While this was better than expected, it marked the weakest sales pace for May since 2009. Meanwhile, Pending Home Sales, a key indicator tracking signed contracts on existing homes and forecasting future closings, rose 1.8% month over month in May after a notable drop the previous month.
What’s the bottom line?
According to Lawrence Yun, Chief Economist for the National Association of REALTORS®, “persistently high mortgage rates” are the main culprit behind the subdued sales activity. He expects sales to rise if mortgage rates fall in thesecond half of the year.
As for inventory, the number of homes available rose to 1.54 million units – an increase of 6.2% from April and 20.3% higher than a year ago. However, this supply is still significantly lower than pre-pandemic figures and far from the 4 million units seen during the housing bubble. This persistent shortage of available homes has helped support home price appreciation.