May Existing Home Sales: Affordability Pumps the Brakes on Home Sales

• 5.41 million existing homes were sold in May (SAAR), down 3.4% from April and down 8.6% from May 2021, according to the National Association of Realtors (NAR).
• Total housing inventory at the end of May amounted to 1,160,000 units, NAR said, up 12.6% from April and down 4.1% from one year ago.
• The median existing-home price for all housing types in May was $407,600, up 14.8% from May 2021.

A sharp pullback in sales is the latest evidence that waning home affordability is forcing the housing market to pump the brakes. With affordability the worst it’s been since at least 2007, many prospective buyers appear to have been hit with sticker shock and are hesitating on their home purchase decision. Coupled with low inventory, May was the fourth consecutive month of declining home sales as the market turns from its peak. As buyers pull back, sellers are coming to terms with a cooling market. The rising share of listings with a price cut suggests sellers are shifting strategies with the tide, and a slower pace of sales is nudging inventory upward, after touching bottom earlier this year. For now, home prices remain elevated, feeding more into affordability woes for potential buyers. Though modest, signs point to a shift in the market winds with more inventory setting the stage for the scales to rebalance in the months ahead.