US existing home sales returning to pre-pandemic pace

Sales of existing homes in America slowed for a fourth month running, returning to the levels seen in 2019 before Covid-19.

According to the National Association of Realtors, in seasonally adjusted terms, existing home sales fell by 3.4% month-on-month to reach an annualised pace of 5.41m (consensus: 5.4m).

In comparison to the year earlier month meanwhile they were down by 8.6%.

The median price for an existing home on the other hand surpassed $400,000, reaching $407,600, and was up by 14.8% year-on-year with prices higher across all regions.

Lawrence Yun, NAR's chief economists, highlighted the return to pre-pandemic levels of sales after two "gangbuster" years.

He also noted how the "market movements of singñe-family and condominium sales are nearly equal", implying that the shift towards the suburbs in the wake of the pandemic was now fading.

"Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year," Yun added.

"Nonetheless, homes priced appropriately are selling quickly and inventory levels still need to rise substantially – almost doubling – to cool home price appreciation and provide more options for home buyers."

Ian Shepherdson, chief economist at Pantheon Macroeconomics, was considerably more downbeat, pointing out how sales had fallen by a third in annualised terms over the three months to May.

A surge in mortgage rates had also pushed up the monthly payment on a median home by over 50% since last August and in absolute terms single-family home sales had increased by a third since February and were set to "rise much further as no one wants to be the last seller in a sinking market".

He also noted that, in seasonally adjusted terms, single-family home prices fell by 0.7% in May, the first dip since June 2021.

"[...] The speed of the dislocation in the market in recent months, thanks to the suddenness of the spike in rates, means that a period of falling prices is a good bet even with inventory well above this level."