Associated Press
The housing market is even more frozen over than it was last year, and more data is piling up to prove it.
New home sales dropped sharply in May, the US Census Bureau reported on Wednesday, showing that the US housing market is at an impasse as buyers hesitate and sellers struggle to offload their homes.
Sales of new single-family houses fell 13.7% month-over-month, from 722,000 in April to a seasonally adjusted annual pace of 623,000 in May. The May number is 6.3% lower year-over-year.
The decline in sales was led by a sharp slowdown in the South. Sales in the region plunged 15.5% year-over-year and 21% from the previous month. The Northeast was the only region that saw an increase in new home sales.
Americans aren’t buying homes, but it’s not because supply is constrained like it was in 2024. On the contrary, housing supply has picked up.
The May report showed that there were roughly 507,000 new houses available for sale. At May’s sale pace, it would take 9.8 months to clear the supply of housing. Anything higher than six months of supply typically indicates a buyers market — a notable shift from the sellers market that led to rapidly appreciating home prices post pandemic.
In the South, new home construction actually hit its higher levels since 1971 last month, with 311,000 new units on the market thanks to increased construction and decreased sales.
Realtor.com
Data from Redfin earlier this month also points to a deep freeze in US homebuying activity.
Redfin reported that there’s a record $700 billion worth of homes for sale across the country, an all-time high by dollar amount.
So why aren’t buyers jumping in?
Prospective homebuyers are hesitant to pull the trigger on a purchase with elevated mortgage rates and economic uncertainty. Mortgage rates still remain prohibitively high, averaging 6.82% in May, according to Freddie Mac. And home prices are still rising, making affordability a challenge; the median new home sold for $426,600 last month, up 3% from the $414,300 median a year ago.
It’s not just new homes that aren’t selling. Existing home sales dropped 0.7% this May compared to last year, according to the National Association of Realtors. May’s decrease comes on the heels of the slowest April buying season in 16 years.
The slowdown in the housing market is raising warning signs for some experts. Meredith Whitney, the CEO of investment research firm Meredith Whitney Advisory Group and senior advisor at Boston Consulting Group, told Yahoo Finance that she believes the housing market is on track for “its worst year in decades.”
The seasonally adjusted annual rate for home sales is currently around 4 million, an alarmingly low number in Whitney’s perspective.
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