AP Business Writer Alex Veiga
NEW YORK (AP) – In May, sales of previously occupied US homes have become less affordable for home buying, despite the continued increase in real estate inventory in the market due to stubbornly high mortgage rates and rising prices.
The National Association of Real Estate said on Monday that existing home sales rose 0.8% to a seasonally adjusted annual rate of 403 million years since last month in April.
Compared to last May, sales fell 0.7%. According to FactSet, the latest home sales exceeded the 3.95 million pace economists expected by the 3.95 million pace economists.
“We’ve seen a lot of effort into making this a reality,” said Lawrence Yun, chief economist at NAR.
Home prices have increased annually for the 23rd day in a row, but growth continues to slow. The national median selling price rose 1.3% from the previous year in May, reaching a record high of $422,800 in May.
The U.S. housing market has been in a recession since early 2022 when mortgage rates began to rise from their lows during the pandemic era. Home sales fell to their lowest levels last year in nearly 30 years.
Mortgage buyer Freddie Mac said the average 30-year mortgage rate has so far been slightly above 7%. This year’s low point arrived five weeks ago. At that time, the average rate temporarily fell to 6.62%. Last week, the average was 6.81%.
The home purchased last month may have signed contracts in April and May, when the average 30-year mortgage rate ranged from 6.62% to 6.89%.
High mortgage fees that allow borrowers to add hundreds of dollars a month continue to be an important affordable hurdle for many home buyers. The surge in home prices has helped keep homeownership out of reach. Median U.S. home sales prices have risen 52% since May 2019, while median U.S. annual revenues have risen 30% over the same period, Yun noted.
Price growth has slowed, but rising mortgage rates and rising prices have forced future home buyers to save more for their down payments. In May, buyers needed an annual income of $91,960 to provide a typical home, or a typical home that is nearly 87% more than May 2019, according to Realtor.com.
Home shoppers who can afford to buy with current mortgage fees have benefited from a wider range of options in the market.
At the end of last month there were 1.54 million homes selling, up 6.2% from April and 20.3% higher than last May, NAR said. But it’s still far below the typical 2 million homes for sale before the pandemic.
Inventory at the end of May will be converted from a 4.4-month pace at the end of April to a 3.8-month supply at the current sales pace at 4.6-month supply at the current sales pace. Traditionally, supply for 5-6 months was considered a balanced market between buyers and sellers.
Original issue: June 23, 2025 10:21am EDT
