May Existing Home Sales: Inventory Shortage Shows Signs of Easing

• Existing home sales fell 0.9% from April to 5.8 million (SAAR), according to the National Association of Realtors, the fourth straight monthly decline.
• The median existing-home price in May was $350,300, up 23.6% from May 2020.
• Inventory rose 7% from April, and properties typically stayed on the market for 17 days in May -- unchanged from April but down from 26 days a year ago, according to NAR.

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Demand for housing remains strong, but for the fourth straight month, existing home sales took a step back from a month before. While homes continue to sell incredibly quickly and bidding wars persist in many markets, it's becoming clear that record high price growth and an enduring shortage of available homes are beginning to hinder would-be homebuyers. But there are some signs emerging that this sales slowdown may be passing. Inventory pressures have started to ease, suggesting that the worst of the shortage may be behind us. The National Association of Realtors' inventory measure has risen month-month in each of the past three months -- something that we would normally expect to see as the spring selling season gets into full swing, but nothing to take for granted in an abnormal market still distorted somewhat by pandemic-related factors. And recent declines in the price of lumber should make it easier for homebuilders to put up more homes, adding even more supply to the market. While these recent developments aren’t going to bring balance to the market overnight, they are welcome signs for a market that is hungry for more supply. For now, though, sales volume continues to struggle to regain the momentum it built late last year.