Home Sales Hit Serious Low In May

May home sales took a major hit as the median U.S. home price hit another record high.

Home sales were down 1.7% from April on a seasonally adjusted basis, according to new data from Redfin, and sank 2. 9% YOY.

In the past ten years, there have only been two months with fewer sales than this: October 2023, when rates hit a 23-year high, and May 2020, when the pandemic began.

“Buyers today are facing many of the realities of a hot market even though few homes are changing hands,” said Redfin Senior Economist Elijah de la Campa.

“Sales are sluggish because high homebuying costs are making both house hunters and prospective sellers skittish. And with so few homes for sale, buyers in some markets are getting into bidding wars, which is helping push home prices to record highs.”

The median home sale price increased 5.1% YOY to a new record high of $439,716. At the same time, the 30-year fixed rate shot up to 7.06%.

Rates have cooled some in the last few weeks and now sit at 6.95%. While this will likely result in a brief uptick in mortgage applications, both purchase and refi, the current cost of homeownership may continue to deter homebuyers who have gotten accustomed to waiting for the market to shift.

The number of homes for sale is down about 25% from pre-pandemic levels, though new listings saw improvement recently.

More “stale” listings– homes that have been on the market for more than 30 days– are emerging, and price cuts are becoming more common among sellers. Nearly one in five homes for sale last month got a price trim, just under the record high number of price cuts set in October 2022.