Home Sales Stagnate: High Rates and Prices Challenge Buyers

The U. S. housing market is feeling the pinch. Home sales in May barely budged, rising just 0. 8% from April. This sluggish pace is the slowest for May since 2009, a year when the market was still recovering from a major crash. Compared to last year, sales dropped by 0. 7%, showing that the housing market is still struggling. Prices are still climbing, but not as fast as before. The median home price hit a new high of $422, 800, up 1. 3% from last year. However, this is the smallest annual price increase since June 2023. High mortgage rates are a big reason why sales are so slow. Rates have stayed close to 7% this year, making it harder for people to afford homes. Buyers are feeling the squeeze. They need a higher income to afford a home now. In May, buyers needed an annual income of $91, 960 to afford a typical home with a 20% down payment. That's nearly 87% more than in May 2019. First-time buyers are especially affected. They made up only 30% of home sales last month, down from the usual 40%. There are more homes on the market now. At the end of May, there were 1. 54 million unsold homes, a 6. 2% increase from April and 20. 3% higher than last year. This means buyers have more choices, but it also means homes are taking longer to sell. Homes stayed on the market for 27 days last month, up from 24 days last year. Sellers are starting to feel the pressure. With more homes for sale and fewer buyers, sellers may need to lower their prices or offer better deals. About 28% of homes sold above their list price last month, down from 30% last year. Homebuilders are also offering incentives like mortgage rate buydowns to attract buyers. The market is shifting. It's moving from a seller's market to a more balanced one. This means buyers have more power now than they have in years. However, high mortgage rates and prices are still big obstacles for many would-be homebuyers.