U.S. Existing Home Sales (May 2024)

U.S. Existing Home Sales Decline Further in May as Prices Hit a Record High

• Existing home sales fell by -0.7% month-on-month (m/m) to 4.11 million units (annualized) in May, coming in a bit better than consensus forecast calling for a steeper decline of -1.4% m/m.
• Single-family home sales fell -0.8% to 3.71 million units, while sales in the smaller condo/co-op segment remained unchanged at 400k units.
• The sales decline was entirely in the South last month (-1.6% m/m), as sales remained unchanged in all other regions.
• Total housing inventory at the end of May was 1.28 million units, up 18.5% from a year ago. Measured at the current sales rate and seasonally adjusting, unsold inventory sat at 3.7 months' supply – up from 3.1 months in May 2023, but still tight on a historic basis.
• House prices were up 5.8% from a year ago, an acceleration from 5.4% (y/y) in the month prior. Median existing-home prices now stand at $419,300 – the highest price ever recorded. On a seasonally adjusted basis, median home prices rose 0.7% m/m, extending last month's 0.4% increase (seasonal adjustment performed by TD Economics).  

Key Implications

• The housing market continues to be mired in a tangle as elevated mortgage rates and record home prices dissuade prospective buyers and keep potential sellers on the sideline. There isn't much of a reprieve in the new home market either, as higher prices in that segment test the affordability limit of already stretched buyers. With sales declining for the third month in a row, the prospect for a pick up in the housing market seems tenuous. 
• While mortgage rates pulled back for three consecutive weeks following bolstered expectations for a Fed rate cut, they are still high relative to pre-pandemic levels. Additionally, given that a rate cut is most likely to occur closer to the end of the year, activity in the housing market will likely remain subdued for much of 2024. 

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