US existing home sales little-changed on sluggish market
WASHINGTON: 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.
From a year ago, existing home sales were down 0.7 per cent.
Yun told reporters that the 4.03 million pace meant the market is running at 75 per cent 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 per cent as of the end of May, according to Freddie Mac, slightly above the 6.8 percent in late April.
The elevated 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.
The median sales price was up 1.3 percent from a year ago at US$422,800, a record high for the month of May, the NAR said.
"If mortgage rates decrease in the second half of this year, expect home sales across the country to increase due to strong income growth, healthy inventory, and a record-high number of jobs," Yun added.
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