U.S. existing-home sales slipped 0.4 percent in May, as the prolonged shortage of properties on the market is deterring home-buying.
The National Association of Realtors said Wednesday that homes sold at a seasonally adjusted annual pace of 5.43 million in May, the second straight monthly decline. Sales have tumbled 3 percent over the past year, despite steady job growth that has boosted demand from would-be homebuyers as the unemployment rate has fallen to a multi-decade low of 3.8 percent.
The housing market is caught in a vice grip of fewer sales listings and rising mortgage rates, both of which have made home ownership less affordable for many Americans.
The number of sales listings has dropped 6.1 percent over the past year to 1.85 million. That forced would-be buyers to act quickly and sign contracts on average in just 26 days. It also pushed up home values as the median sales price in May rose 4.9 percent from a year ago to $264,800.
Because of declining inventories, sales of homes worth less than $250,000 have declined over the past year. But in a sign of greater income inequality, sales of homes worth more than $1 million have surged 14.4 percent this year.
Adding to the pressure are rising mortgage rates. The average interest charged on a 30-year, fixed rate mortgage was 4.62 percent last week, up from 3.91 percent a year ago, according to mortgage buyer Freddie Mac.
Higher mortgage rates have the risk of further suppressing sales listings, even if the higher home values encourage some people to list their properties. The Realtors found that 15 percent of homeowners wouldn’t list their properties for sale due to the increased mortgage costs, up from 11 percent in April.
Sales rose in the Northeast in May. But sales fell in the Midwest, South and West.