The pace of U.S. home sales dropped again last month and is expected to keep sliding, a new report shows, as buyers pull back in Southern Nevada and other metro areas amid sharply higher borrowing costs.
Across the country, the seasonally adjusted annual rate of home sales last month fell 3.4 percent from April and 8.6 percent from May 2021, the National Association of Realtors reported Tuesday.
This marked the fourth consecutive month that sales of previously owned homes tumbled, the association said.
Sales have essentially returned to 2019 levels “after two years of gangbuster performance,” Lawrence Yun, the group’s chief economist, said in a news release.
He said additional sales declines “should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year.”
Home sales have been sliding in Southern Nevada and across the country lately, as rising mortgage rates have ended the cheap money that fueled America’s unexpected housing boom of rapid sales and record-high prices after the pandemic hit.
Moreover, sales prices keep showing big year-over-year gains, and people also are paying more for gasoline and other goods amid high inflation, prompting the Federal Reserve to raise interest rates lately.
“A sharp pullback in sales is the latest evidence that waning home affordability is forcing the housing market to pump the brakes,” Nicole Bachaud, an economist with home-listing site Zillow, said in a statement Tuesday.
Many prospective buyers “appear to have been hit with sticker shock and are hesitating on their home purchase decision,” and as buyers pull back, sellers are “coming to terms with a cooling market,” she added.
A rising share of home sellers are slashing prices in Las Vegas and around the U.S. Locally, 13.7 percent of active listings had a price cut in May, compared with 11.5 percent across the country, Zillow data shows.
Locally and nationally, the share of price cuts rose for the third consecutive month in May.
Home-listing firm Redfin Corp., which has offices around the country, including in Las Vegas, said in a recent Securities and Exchange Commission filing that it is slashing its workforce by around 470 employees, comprising some 6 percent of its total headcount.
“We could be facing years, not months, of fewer home sales, and Redfin still plans to thrive,” CEO Glenn Kelman wrote in an email to staffers last week.
He added that the company is “losing many good people today, but in order for the rest to want to stay, we have to increase Redfin’s value. And to increase our value, we have to make money.”
As sales tumble, sales prices overall remain much higher than they were a year ago.
Nationally, the median sales price of previously owned homes last month was $407,600, up 14.8 percent from a year earlier, the National Association of Realtors reported.
In Southern Nevada, the median sales price of previously owned single-family homes — the bulk of the market — was a record-high $482,000 in May, up 25.2 percent from a year earlier, according to trade association Las Vegas Realtors.
Locally, just over 2,900 houses traded hands last month, down almost 9 percent from May 2021.
Meanwhile, the average rate on a 30-year home loan was 5.78 percent as of last week, up from 5.23 percent the week before and 2.93 percent a year ago, according to mortgage-finance giant Freddie Mac.
The weekly rate hike was the biggest in decades.
Contact Eli Segall at firstname.lastname@example.org or 702-383-0342. Follow @eli_segall on Twitter.