Existing home sales in the United States edged lower in May as prices reached a record high on continued tight inventory, according to industry data published on Friday.
Sales of previously owned homes fell by 0.7 percent from a month earlier to a seasonally adjusted annual rate of 4.11 million, the National Association of Realtors (NAR) said in a statement.
This was slightly above market expectations, according to Briefing.com.
Year-over-year sales were down 2.8 percent.
"Existing home sales edged lower in May, reflecting the backup in mortgage rates a month or two earlier," Oxford Economics lead US economist Nancy Vanden Houten wrote in a note to clients, referring to the high cost of borrowing.
US mortgage costs remain elevated as the Federal Reserve continues to keep interest rates high in its battle to bring inflation back down towards its long-term target of two percent.
The popular 30-year fixed-rate mortgage, which is indirectly affected by the Fed's decisions about its key short-term lending rate, sits at just under 6.9 percent, according to the government-sponsored firm Freddie Mac, which buys and guarantees existing mortgages.
This is down slightly from earlier this year, when it jumped above seven percent following a spike in yields on the popular 10-year US Treasury, which is used by lenders to help price a range of different financial products.
"The more recent decline in mortgage rates, which we expect to gain steam as interest-rate cuts by the Federal Reserve get underway, will support a modest rebound in home sales later in the year," Vanden Houten said.
The median sale price of an existing home rose 5.8 percent year-over-year to $419,300, the highest price ever recorded.
"Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months," NAR Chief Economist Lawrence Yun said in a statement.
"Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions," he added.
Total housing inventory at the end of May was up 6.7 percent from a month earlier, and up 18.5 percent from a year ago.
"Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers," Yun said.
"The mortgage payment for a typical home today is more than double that of homes purchased before 2020," he added. "Still, first-time buyers in the market understand the long-term benefits of owning."
