(NewsNation) — U.S. home sales in May dropped to the third-lowest level in a decade as homebuyers continue to face elevated mortgage rates, record-high prices and low inventory.
Last month, 407,959 homes were sold, down roughly 3% from a year ago, according to real estate brokerage Redfin. To put that in perspective, only two months in the past decade saw lower sales — October 2023, when mortgage rates hit a 23-year high and May 2020, at the onset of the pandemic.
Despite the slowdown, demand continues to outpace supply across much of the country, which has pushed prices higher. In May, the median home sale price hit a record $439,716, up 5.1% from the year before.
“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,” Redfin senior economist Elijah de la Campa said in a statement.
The so-called “lock-in” effect has homeowners holding onto their low interest rates, which has kept regional markets competitive. The number of active listings improved in May but is still roughly 25% below pre-pandemic levels, Redfin found.
However, market dynamics vary in different parts of the country.
Florida, for example, is home to the nation’s fastest-cooling markets. Active listings in North Port, Tampa and Cape Coral are all up more than 45% compared to a year ago. Storm concerns, costly home insurance and a construction boom have driven roughly 40% of home sellers in those cities to slash their asking price.
Meanwhile, inventory remains tight in the northeast. Last month, 77% of homes sold in Rochester, New York, went for more than their final list price. Compared to a year ago, the number of active listings fell most in New Brunswick, New Jersey (-8.1%), according to Redfin.
As for sales prices, they rose the most from a year earlier in Anaheim, California (+17.6%), Cleveland (+15.1%) and Nassau County, New York (14.2%).
Last week, the average rate on a 30-year home loan was 6.95%, down from the roughly 8% high last fall but still double the rate compared to just a few years ago.
The current situation has Americans feeling historically bad about the housing market, with 76% of people saying it’s a bad time to buy a home.