US existing home sales rose in May, but mortgage rates remain a constraint

From Yahoo Finance: 2025-06-23 10:04:00

U.S. existing home sales rose 0.8% in May to a seasonally adjusted annual rate of 4.03 million units, higher than the expected 3.95 million units. Sales fell 0.7% year-over-year, the slowest for May since 2009. High mortgage rates are cited as the main reason for subdued sales, with hopes for increased sales if rates decrease in the second half of the year.

The average rate on 30-year fixed-rate mortgages is just under 7% this year. President Trump’s tariffs have increased economic uncertainty, leading the Federal Reserve to pause interest rate cuts. Fed Chair Powell predicts inflation due to import duties. Homebuilder sentiment is at a 2-1/2-year low, with more builders cutting prices to attract buyers.

Residential investment contracted slightly in the first quarter following a rebound in 2024. Inventory of existing homes increased by 6.2% to 1.54 million units in May, up 20.3% from a year ago. The median existing home price rose 1.3% to $422,800, an all-time high for May.

At the current sales pace, it would take 4.6 months to exhaust existing home inventory, up from 3.8 months last year. Properties stayed on the market for 27 days compared to 24 days a year ago. First-time buyers accounted for 30% of sales, below the 40% needed for a robust housing market.

All-cash sales constituted 27% of transactions, down from 28% a year ago. Distressed sales, including foreclosures, made up 3% of transactions, up from 2% a year ago.



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