Connect with us

Hi, what are you looking for?

Business

US home prices top $400,000 for first time, crimping May sales

The median US home price broke above $400,000 for the first time, sending existing home sales in May falling for the fourth straight month.

The White House plan will encourage state and local authorities to allow more housing density to help reduc costs that are a big factor in rising inflation
The White House plan will encourage state and local authorities to allow more housing density to help reduc costs that are a big factor in rising inflation - Copyright AFP -
The White House plan will encourage state and local authorities to allow more housing density to help reduc costs that are a big factor in rising inflation - Copyright AFP -

The median US home price broke above $400,000 for the first time, sending existing home sales in May falling for the fourth straight month, according to industry data released Tuesday.

Sales toppled 3.4 percent compared to April as the median sales price hit $407,600, a 14.8 percent surge compared to a year ago, the National Association of Realtors (NAR) reported.

The sales pace slowed to a seasonally adjusted annual rate of 5.41 million last month, which was 8.6 percent lower than May 2021, the report said.

“Home sales have essentially returned to the levels seen in 2019 — prior to the pandemic — after two years of gangbuster performance,” said NAR Chief Economist Lawrence Yun.

“Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year,” he said.

Home loan rates jumped to 5.23 percent in May for a 30-year, fixed-rate mortgage, from 4.98 percent in April, according to Freddie Mac, as the Federal Reserve cranks up the benchmark borrowing rate to tamp down surging inflation.

The sales slowdown caused the inventory of homes on the market to jump 12.6 percent to a 2.6-month supply — just above the level of May 2021, according to the report.

Bargain borrowing rates had helped fuel the strong demand for home buying during the pandemic, driving prices ever higher as builders have struggled to keep up due to supply backlogs for lumber and other materials and a shortage of workers.

Now, “the market is adjusting, rapidly and painfully, to the surge in mortgage rates, which has pushed up the monthly payment on a median home by more than 50 percent since last August,” said Ian Shepherdson of Pantheon Macroeconomics.

He said prices normally would not begin to fall until inventories grew to a seven-month supply, but “the speed of the dislocation in the market in recent months, thanks to the suddenness of the spike in rates, means that a period of falling prices is a good bet.”

Sales fell throughout the United States, except in the Northeast, while prices rose nationwide.

All-cash buyers accounted for a quarter of sales in May, NAR said.

Yun noted trends in condominium sales may indicate that “the preference towards suburban living over city life that had been present over the past two years is fading with a return to pre-pandemic conditions.”

AFP
Written By

With 2,400 staff representing 100 different nationalities, AFP covers the world as a leading global news agency. AFP provides fast, comprehensive and verified coverage of the issues affecting our daily lives.

You may also like:

Business

Tokyo stocks closed lower Monday with investors disheartened by global selloffs linked to growing fears over an economic slowdown.

Tech & Science

Scientists and engineers behind NASA's DART mission will be watching Monday evening - hoping to witness a spacecraft crash into an asteroid.

Business

Construction crews are back at Dearborn, remaking Ford's century-old industrial complex once again.

Tech & Science

Organizations should adopt security automation to assist with the detection and response of cyber-threats.