US housing market: Record prices defy falling demand and rising supply
What caused the existing home sales to drop in May?
Existing home sales dropped in May due to a combination of factors, including rising mortgage rates, record-high prices, and a jump in the supply of homes for sale2. This has led to a decrease in demand as would-be homebuyers are deterred by higher borrowing costs and sellers are hesitant to sell and refinance their next home purchase at higher rates.
What impact are high mortgage rates having on the housing market?
High mortgage rates are causing a significant impact on the housing market. They are discouraging potential homebuyers from purchasing homes due to increased borrowing costs, leading to a decrease in demand. Additionally, existing homeowners are reluctant to sell their homes and give up their current, lower mortgage rates, further reducing the supply of homes for sale. This combination of high mortgage rates and limited supply is pushing home prices to record highs, creating an unusual situation where supply and demand principles seem inverted.
How much did the median home price increase year-over-year in May?
The median home price in the US increased by 5.8% year-over-year in May, reaching a record high of $419,300. This increase occurred despite a drop in existing home sales and a rise in the supply of homes for sale. Factors such as regional market differences and high mortgage rates have contributed to this unusual situation.