The National Association of Realtors announced Tuesday that existing home sales decreased in May by 3.4 percent from April, the fourth consecutive monthly decline. May existing-home sales fell by 3.4 percent from April to a seasonally adjusted annual rate of 5.41 million. May also saw a decrease in single-family home sales to a seasonally adjusted annual rate of 4.80 million, down from 4.98 million in April and 7.7 percent a year earlier.
“Existing home sales have now fallen back to their pre-pandemic pace,” said Mark Vitner, Senior Economist with Wells Fargo Economics, Charlotte, N.C. “Higher prices and rising interest rates have reduced affordability.” He also added that a lack of inventory had been a significant obstacle. Nevertheless, the data indicated some progress: inventories increased to 1.16 million in May, up roughly 13 percent from April but still down 4.1 percent from a year earlier.
Median existing-home prices continue to rise. In May, they increased to $407,600, up 14.8% from the same month last year ($355,000).
MBA Weekly Survey: Applications on a Winning Streak Despite Nearly 6% Interest Rates
Mortgage Bankers Association announced that applications increased for the week ending June 17th. This is the second consecutive week of application increases after more than a month of consistent declines. It is great to see applications increasing even when mortgage rates have been rising.
The Market Composite Index climbed by 4.2 percent over the previous week on a seasonally adjusted basis. Purchase applications led to the weekly uptick, with the Index rising 8% over the previous week.
Refinances keep dropping. The Refinance Index fell 3% from the prior week and was 77% lower than it was during the same week a year prior. Refinance applications comprised 29.7% of all mortgage activity, down from 31.7% the week before. At the same time, 10.6 percent of all applications were for adjustable-rate mortgages.
U.S. Housing Market Cooling As Building Permits Tumble, Starts Fall
As rising mortgage rates add to decreased affordability for entry-level and first-time buyers, future U.S. homebuilding permits fell to a five-month low in April, suggesting the housing industry was slowing. However, the headline number of the declines does not tell the entire story. The Commerce Department’s data on Wednesday also revealed a backlog of homes still to be built, meaning the moderation in homebuilding would be minimal.
The number of building permits fell by 3.2 percent in April to 1.819 million the lowest level since last November. According to economists surveyed by Reuters, building permits were expected to decline to a rate of 1.812 million units, but the market is still performing better than some predictions. The single-family housing market saw the most significant drop, with permits falling 4.6 percent to 1.110 million units, the lowest level since last October.
Last month, housing starts decreased by 0.2% to 1.724 million units. Single-family housing starts, which make up the majority of new construction, fell 7.3% to 1.100 million units, which is also their lowest level since last October. Homebuilding is still supported by a record low housing supply even though overall starts have fallen for two consecutive months. The number of houses approved for construction yet to be started rose 0.7% to an all-time high of 288,000 units in April. The backlog for single-family dwellings was at its highest level since June 2006.
Next week’s potential market-moving reports are:
- Monday, June 27th – Pending Home Sales Index
- Tuesday, June 28th – S&P Case-Shiller U.S. Home Price Index
- Wednesday, June 29th – Gross Domestic Income Revision (SAAR)
- Thursday, June 30th – Initial Jobless Claims, Continuing Jobless Claims, PCE Inflation
- Friday, July 1st – Construction Spending, ISM Manufacturing Index
As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.