Average price for US homes hits record high in May despite rise in interest rates
The average US house price hit an all-time high of over $400,000 in May even as interest rate rises and high prices led to a fourth consecutive month of declining sales.
Existing home sales fell 3.4% last month from April to a seasonally adjusted annual rate of 5.41m, the National Association of Realtors said on Tuesday. Sales fell 8.6% from May last year, hitting a two-year low.
After climbing to a 6.49m annual rate in January, sales have fallen to the slowest pace since June 2020, near the start of the pandemic, when they were running at an annualized rate of 4.77m homes.
May’s sales were mostly closings on contracts signed one to two months ago before mortgage rates started accelerating amid a surge in inflation expectations and aggressive interest rate hikes from the Federal Reserve.
But demand for homes still outstrips supply. Even as home sales slowed, home prices kept climbing in May. The national median home price jumped 14.8% in May from a year earlier to $407,600. That’s an all-time high according to data going back to 1999, NAR said.
The housing market, a crucial part of the economy, is slowing as homebuyers facing sharply higher home financing costs than a year ago following a rapid rise in mortgage rates.
Average long-term US mortgage rates had their biggest one-week jump in 35 years with the Fed last week raising its key rate by three-quarters of a point in a bid to combat the worst inflation in 40 years.
The average rate on a 30-year home loan climbed to 5.78% last week, the highest its been since November of 2008 during the housing crisis, according to mortgage buyer Freddie Mac.
“Today’s mortgage rates are knocking on the door of 6%,” said Lawrence Yun, NAR’s chief economist. “Given those conditions, I do
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