The reality of the home sales market is in the eye of the beholder these days and the just-released Existing Home Sales report doesn't shed much light.  The National Association of Realtors (NAR) logged an annual pace of 4.3 million units, essentially unchanged from last month's 4.28m and close enough to the median forecast of 4.25m.  

Existing sales bottomed in January at 4.0m units, and you'd have to go back to 2010 to find anything lower.  The bounce back since then has lacked a certain sense of urgency, but that's not a huge surprise given the persistence of mortgage rates near 7%. 

A frequent observation is that the rapid rise in rates has homeowners reluctant to give up the low rates achieved in 2020 through early 2022, thus crimping supply and restricting sales. The housing market has certainly managed to post a lot more inventory at rates this high, but only have years of getting used to them (not to mention the fact that rates were still generally falling from the ultra-high levels of the early 80s at the time).

A chart of actual sales (as opposed to inventory) versus mortgage rates suggests that the ultra-low rates achieved in 2020 through early 2022 also helped pull forward a few years worth of housing demand.

All that having been said, those who continue to lament inventory being a bigger issue in the resale market certainly have a leg to stand on.  The difference in "months of supply" versus the new homes market is very enlightening in that regard. 

Bottom line, it will either take lots of time or decent drop in rates to free up more of the discretionary inventory of existing homes.

Other highlights from the release:

  • The median existing-home price for all housing types in May was $396,100, a decline of 3.1% from May 2022 ($408,600). Prices grew in the Northeast and Midwest but fell in the South and West.
  • Properties typically remained on the market for 18 days in May, down from 22 days in April but up from 16 days in May 2022.
  • First-time buyers were responsible for 28% of sales in May, down from 29% in April but up from 27% in May 2022.
  • All-cash sales accounted for 25% of transactions in May, down from 28% in April and identical to one year ago.
  • Regional breakdown of % change in existing sales from last month (and last year):
    • Northeast -2.0%  ( -25.4%)
    • Midwest   -2.9%   (-20.8%)
    • South      + 1.5%  ( -16.5%)
    • West       + 2.6%  (-25.5%)