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In May, nationally Existing-home sales slid for the second consecutive month, falling 3.4% as of last measure, according to the National Association of REALTORS® (NAR), as higher interest rates continue to impact buyer affordability. Sales are down 23% compared to the same period a year ago, while contract signings dropped 20.3% year-over-year. With sales cooling, buyers in some parts of the country have found relief in the form of declining sales prices, which are down 1.7% year-over-year nationally, although more affordable markets continue to see price gains.
When looking at the local data, New Listings in the Chattanooga region decreased 19.3% to 1,160. Pending Sales were down 19.8% to 897. Inventory levels grew 12.2% to 1,651 units. Prices continued to gain traction. The Median Sales Price increased 2.5% to $323,028. Days on Market was up 142.9% to 34 days. Buyers felt empowered as Months Supply of Inventory was up 28.6% to 1.8 months.
While fluctuating interest rates have pushed some buyers to the sidelines, a shortage of inventory is also to blame for lower-than-average home sales this time of year, as current homeowners, many of whom locked in mortgage rates several percentage points below today’s current rates, are delaying the decision to sell until market conditions improve. With only 2.9 months’ supply heading into May, available homes are moving fast, with the typical home spending just over three weeks on the market, according to NAR.
There are positive signs that interest rates might be on the way down. Just earlier today, Dr. Lawrence Yun, NAR Chief Economist, reacted to lower inflation rates for May:
"Inflation calmed down in May, and further deceleration looks likely in the upcoming months. It also marks the first month in two years that wage growth outpaced consumer price inflation, improving the average standard of living. Moreover, low inflation means that the Federal Reserve should stop raising interest rates and possibly slash rates towards the year-end or early next year.”
Yun continues. “The yield on the 10-year Treasury is responding positively with a rate decline to 3.7%. That normally means the 30-year mortgage rate is around 5.5% to 5.7%. Of course, we know the mortgage rates have been near 7% recently, but the potential for a decline is real as we progress through the year. "
So if potential homebuyers have been on the fence about entering the housing market, it might be time to take a look at what possibilities are out there. No matter the market, it’s always a good idea to consult the expertise of a REALTOR® when potentially buying or selling property. REALTORS® work for their clients all year long. That’s Who We R®.