US home sales crumble in May on higher rates and record prices, says Redfin

NVR

14/06/2024 14:35

June 14 (Reuters) - U.S. home sales in May fell to among
the lowest levels in the past decade, real estate brokerage
Redfin  RDFN.O  said in a report, as both demand and supply
remained sluggish in a high-mortgage rate environment. 
    
    WHY IT'S IMPORTANT 
  
    Housing affordability in the U.S. is at an all-time low.
Median home prices have scaled record highs and the 30-year
fixed-mortgage rate is hovering at around 7%. This has depressed
both demand and supply.
    The number of homes for sale remains roughly 25% below
pre-pandemic levels, according to Redfin. 
    Home sellers are holding onto lower fixed mortage rates
secured on properties during an era of cheap debt in the face of
higher rates currently.
    In May, 407,959 homes were sold. Only October 2023 (398,537)
and May 2020 (369,300) in the past decade have recorded fewer
home sales than last month, as per Redfin data.
    
    BY THE NUMBERS
    Home sales fell 1.7% month-over-month in May on a seasonally
adjusted basis and dropped 2.9% from a year earlier, while
median home sale price rose to a record high of $439,716, up
1.6% month-over-month and 5.1% year-over-year, as per Redfin.  
    Seasonally adjusted new listings rose 0.3% month-over-month
in May and 8.8% from a year earlier. Still, they were roughly
20% below pre-pandemic (May 2019) levels. 
        
    KEY QUOTE
    "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," said Redfin Senior Economist Elijah de la Campa.

    MARKET REACTION
    Homebuilder stocks surged in 2023 as tighter supply led to
higher sales. However, the rally has since lost momentum.
    Pultegroup Inc  PHM.N  is up 11.8% year-to-date, D.R. Horton
Inc  DHI.N  is down 5.61% and Lennar Corp  LEN.N  is up 4.03%.
 

 (Reporting by Ananta Agarwal; Editing by Sriraj Kalluvila)
 ((Ananta.agarwal@thomsonreuters.com;))