Sales of homes in the United States fell for the fourth consecutive month in May as a sharp rise in prices and a shortage of houses for sale led to a slowdown in the market.
Existing home sales fell 0.9 percent in May from April, the National Association of Realtors said Tuesday, with the median sales price climbing nearly 24 percent from a year earlier to a record $350,300.
Home sales in May were nearly 45 percent higher than they were a year ago as buyers continue to leave cities in search of more space and better work-from-home scenarios. That spike in demand has exacerbated a shortage in housing supply that was already problem before the pandemic.
Economists don’t expect the dynamics to shift anytime soon.
“There’s so many factors with limited supply that it’s hard to imagine a huge increase in supply any time soon,” said Nancy Vanden Houten, lead economist at Oxford Economics. “The housing market has been suffering for many years from a shortage of homes for sales and that’s only gotten worse as the pandemic created a demand for housing.”
About 1.23 million previously owned homes were on the market in May, a 20.6 percent decline from a year ago, the report said.
“Lack of inventory continues to be the overwhelming factor holding back home sales, but falling affordability is simply squeezing some first-time buyers out of the market,” Lawrence Yun, the Realtor association’s chief economist, said in a statement.
Realtors also cited under-construction and a lack of investment for new homes as some of the chief factors for rising home prices.
Soaring demand for vacation homes is also fueling a spike in prices, especially in Florida, Maryland, Massachusetts, Michigan and North Carolina, the report showed.
From January to April, vacation home sales jumped 57.2 percent year-over-year, according to the 2021 Vacation Home Counties Report.