Don’t get too excited concerning the housing market, regardless of a pair current items of excellent information.
First, pending dwelling gross sales crawled 0.7% larger in May from April, after six straight month-to-month declines. But gross sales dropped 13.6% from May 2021, based on the National Association of Realtors.
“Despite the small gain in pending sales from the prior month, the housing market is clearly undergoing a transition,” NAR Chief Economist Lawrence Yun mentioned in a press release. “Contract signings are down sizably from a year ago because of much higher mortgage rates.”
Mortgage charges have climbed because the Federal Reserve has boosted its federal funds price goal 150 foundation factors since March.
Mortgage Rates Near 14-Year High
The 30-year fixed-mortgage price averaged 5.81% as of June 23, hitting a near-14-year-high, based on Freddie Mac. The price rose from 5.78% June 16. It totaled simply 3.02% a yr in the past.
“Trying to balance the housing market by choking off demand via higher mortgage rates is damaging to consumers and the economy,” Yun added. “The better way to balance the market is through increased supply, which also helps the broader economy.”
The different excellent news: new dwelling gross sales rose 10.7% in May from April, after 4 consecutive month-to-month declines. But gross sales have been down 5.9% from May 2021, based on the Commerce Department.
The month-to-month improve possible stemmed from patrons attempting to lock in present mortgage charges earlier than they rise larger, consultants mentioned.
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“We suspect May’s surprisingly strong new home sales will prove to be the last hurrah for new home sales this year,” Mark Vitner, senior economist at Wells Fargo, advised Reuters.
Existing-Home Sales Tumble
Existing-home gross sales fell for the fourth straight month in May—down 3.4% from April and eight.6% from a yr in the past, based on the National Association of Realtors.
“Home sales have essentially returned to the levels seen in 2019 – prior to the pandemic – after two years of gangbuster performance,” the NAR’s Yun mentioned in a press release.
The median existing-home sale-price hit $407,600 in May, up 14.8% from May 2021. This marks 123 consecutive months of year-over-year will increase, the longest streak in NAR information.
Total housing stock on the finish of May rose 12.6% from April and slid 4.1% from a yr in the past.
As of May unsold stock totaled a 2.6-month provide on the prevailing gross sales tempo, up from 2.2 months in April and a couple of.5 months in May 2021.
“Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year,” Yun mentioned.
“Nonetheless, homes priced appropriately are selling quickly and inventory levels still need to rise substantially – almost doubling – to cool home price appreciation and provide more options for home buyers.”