Existing home sales have fallen sharply as mortgage rates remain higher than they were early in the pandemic and housing inventory dwindles.

Existing home sales down 20.4% year over year in May a report From the National Association of Realtors. Factors disrupting the market also weighed on existing home prices, which posted their biggest annual decline in 11 years.

Despite the sharp year-over-year decline, quarter-on-quarter sales increased slightly. On a seasonally adjusted basis, existing home sales rose 0.2% from April to May.

Inventory is one of the biggest factors plaguing existing home sales. Total housing inventory fell 6.1% last month from a year earlier. There was a three-month supply of unsold housing inventory at the end of May.

NAR chief economist Lawrence Yun noted that supply is about half of 2019 levels, which is limiting sales of existing homes. Mortgage rates, meanwhile, are about 1 percentage point higher than they were a year ago, when the Fed was still early in the era of rate hikes.

The median existing-home sales price was $396,100 last month, down 3.1 percent from last year. Prices varied by region, however, with prices rising in the Northeast and Midwest and falling in the West and South; total existing home sales fell year-over-year in all four regions.

The average number of days a property was on the market last month was 18 days, a decrease of 4 days from the previous month. In May 2022, home sales are on average a few days faster than in the previous month.

All-cash sales fell to 25% of transaction volume in May, the same as a year earlier but down 3 percentage points from April. Investors who prefer more cash transactions continue to exit the housing market, accounting for 15% of home purchases last month, down 1 percentage point from a year ago and down 2 percentage points from April.

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