Live news updates: US existing home sales fall as median price hits record high

Sales of previously owned homes in the US dropped for the fourth straight month, against a backdrop of record prices and rising mortgage rates that are hampering potential buyers.

Existing home sales declined in May to a seasonally adjusted annualised rate of 5.4mn units, according to the National Association of Realtors.

The figure aligned with consensus expectations of 5.4mn units, according to economists polled by Reuters. Secondary market sales dropped 3.4 per cent compared with April and have fallen 16.9 per cent since January.

The median US home price rose to $407,600, reaching north of $400,000 for the first time and representing a 14.8 per cent increase from a year ago. Home prices have continued to rise in some markets despite an increase in US mortgage rates, which hit a 35-year high last week.

Year-on-year price growth was the highest in warm weather cities such as Miami, Nashville and Orlando.

NAR chief economist Lawrence Yun said home sales had slowed to pre-pandemic levels. “Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year,” he said.

“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.”

Yun’s comments echo those of Lennar executive chair Stuart Miller, who said on Tuesday that the housebuilder’s strong quarterly results were aided by a shortage of housing supply.

First-time buyers made up 27 per cent of sales in May, down from 31 per cent last year.