Sales of existing homes in the United States were tepid in May, according to industry data released Monday, as high mortgage rates weighed on the market.
Sales of previously-owned homes ticked up 0.8 percent in May from the prior month, to a seasonally-adjusted annual rate of 4.03 million, said the National Association of Realtors (NAR).
“The relatively subdued sales are largely due to persistently high mortgage rates,” said NAR chief economist Lawrence Yun.
“Lower interest rates will attract more buyers and sellers to the housing market,” he added in a statement.
While the uptick exceeded analysts’ expectations, experts anticipate continued weakness in sales as mortgage rates remain elevated and the job market softens as President Donald Trump’s tariffs impact inflation and economic growth.
From a year ago, existing home sales were down 0.7 percent.
Yun told reporters that the 4.03 million pace meant the market is running at 75 percent of what it was before the Covid-19 pandemic, even though the United States has added jobs over the period.
This is primarily due to affordability challenges, he said.
The average 30-year fixed rate mortgage was close to 6.9 percent as of the end of May, according to Freddie Mac, slightly above the 6.8 percent in late April.
The higher mortgage rates come as the US Federal Reserve has held the benchmark lending rate steady this year, keeping interest rates unchanged for a fourth straight policy meeting this month.
Nancy Vanden Houten, lead US economist at Oxford Economics, said a rise in the supply of homes on the market could help cushion risks for sales, especially if price hikes ease.
But for now, the median sales price was up 1.3 percent from a year ago at $422,800, a record high for the month of May, the NAR said.
“It’s a nearly impossible housing market for first-time buyers,” said Navy Federal Credit Union chief economist Heather Long in a statement.
She also warned that “Americans are watching what happens in the Middle East and paying close attention to rising prices at the gas pump.”
The United States bombed Iranian nuclear facilities over the weekend and Tehran has vowed to retaliate.
This sent jitters across the oil market as traders gauged the possibility of whether Iran might close the Strait of Hormuz, a vital route for oil and gas.
