House gross sales fell to one of many lowest ranges on report in Might as excessive costs, elevated mortgage charges, and a housing scarcity proceed to maintain consumers on the sidelines.
In line with information printed by Redfin, there have solely been two months up to now decade with fewer dwelling gross sales: when mortgage charges jumped to a 23-year excessive in October 2023 and in Might 2020, through the early days of the pandemic.
“Patrons as we speak are dealing with most of the realities of a sizzling market though few properties are altering palms,” Redfin senior economist Elijah de la Campa mentioned in a Redfin press launch.
What the Knowledge Says
House gross sales had been down 1.7% on a seasonally adjusted foundation in Might in comparison with the month earlier than and fell 2.9% 12 months over 12 months, whereas the median sale worth rose 5.1% 12 months over 12 months to a report $439,716.
In the meantime, the typical 30-year-fixed mortgage price hit 7.06% in Might. That’s a rise from 6.43% a 12 months in the past and greater than double the all-time low of two.68% through the pandemic.

Whereas costs have jumped, many sellers are being compelled to decrease their checklist worth, as fewer consumers are incentivized to purchase in a market with such excessive mortgage charges, and houses are staying available on the market for longer.
Round 19% of properties in Might reduce their worth, in comparison with 13.2% from a 12 months earlier, with the everyday dwelling on the market spending 32 days available on the market. That’s the very best stage for any Might since 2020, however just like the size of time properties had been available on the market a 12 months in the past. The worth drop was principally seen in areas the place housing provide has been rising, corresponding to in Florida and Texas.

The variety of properties on the market has risen barely, though 25% beneath pre-pandemic ranges. New listings had been up barely in comparison with the month prior, rising 0.3%, however have risen considerably in comparison with final 12 months, leaping 8.8%. Lively listings (which incorporates properties that aren’t promoting) rose 0.4% from April and jumped a whopping 11.1% from the 12 months earlier than.
What Does This Knowledge Imply for Actual Property Traders?
The true property market has been in an odd place for some time. Extra properties are staying available on the market for longer in some areas, largely resulting from tepid curiosity from consumers, who’re hesitant to purchase when charges are excessive.
In the meantime, as has been the case for some time, some homebuyers are reluctant to checklist their properties and quit fastened low charges, that are typically three factors decrease than as we speak’s charges. This has contributed to a scarcity of properties available on the market, with a lag in homebuilding and child boomers deciding to remain put additionally contributing to the present housing scarcity. Combined with excessive dwelling costs, it’s created a stagnant housing market.
“Gross sales are sluggish as a result of excessive homebuying prices are making each home hunters and potential sellers skittish,” de la Campa mentioned within the Redfin press launch. “And with so few properties on the market, consumers in some markets are moving into bidding wars, which is serving to push dwelling costs to report highs.”
Nonetheless, if mortgage charges begin to tick down, gross sales may choose up. Whereas inflation is down, the Federal Reserve says it’s more likely to hold charges as is till September. When a price reduce does come, the Fed is anticipated to remain sluggish and regular, which implies charges are more likely to observe at an analogous tempo.
The Backside Line
Though dwelling costs are nonetheless at report highs, a lower in dwelling gross sales means it’s not a vendor’s market. In some areas of the nation, consumers have extra leverage. However an increase in rates of interest means even these consumers are hesitating.
With the Fed anticipated to maintain charges regular till the autumn, the actual property market may keep stagnant by the summer time, which implies actual property buyers could have to be affected person for a short while longer.
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Word By BiggerPockets: These are opinions written by the writer and don’t essentially characterize the opinions of BiggerPockets.