Home sales in the United States fell for the fourth straight month in May as a sharp rise in prices and a shortage of homes for sale caused the market to slow.
Existing home sales were down 0.9 percent in May from April, the National Association of Realtors said Tuesday, with the average sales price climbing nearly 24 percent year over year to a record $ 350,300.
Home sales were nearly 45 percent higher in May than a year ago as buyers continue to leave cities in search of more space and better work-from-home scenarios. This surge in demand has exacerbated a housing shortage that was a problem even before the pandemic.
Economists don't expect the dynamics to change anytime soon.
"There are so many factors with limited supply that it is hard to imagine that supply will increase dramatically anytime soon," said Nancy Vanden Houten, senior economist at Oxford Economics. "The housing market has suffered from a shortage of homes for sale for many years and that only got worse when the pandemic created demand for housing."
In May, about 1.23 million owner-owned homes were in the market, down 20.6 percent from a year earlier, the report said.
"Inventory shortages continue to be the overwhelming dragging factor on home sales, but falling affordability is simply driving some first-time buyers out of the market," said Lawrence Yun, chief economist for the Brokers' Association, in a statement.
Real estate agents also cited the underbuilding and lack of investment for new homes as some of the main drivers of soaring property prices.
Rising demand for vacation homes is also driving prices up, particularly in Florida, Maryland, Massachusetts, Michigan, and North Carolina, the report showed.
From January through April, vacation home sales rose 57.2 percent year-over-year, according to the Vacation Home Counties Report 2021.