U.S. home sales fell for the fourth consecutive month in May, as high demand continues to drive up real estate prices to unprecedented highs, according to new data from the National Association of Realtors.
The Association released its monthly report on Tuesday, reflecting the unusual dynamics of the real estate market this summer.
The report reveals that home sales fell by 3.4 percent last month to a two-year low of 5.41 million units sold, the lowest level since June 2020. The report saw new momentum in the real estate market in the Northeast, which reported a higher number of sales, but this was offset by lower home sales in the South, Midwest, and West regions.
At the same time, the report noted that median home prices surpassed $400,000 for the first time on record.
The picture which emerges of the real estate market is one of intense competition and a demand for homes that greatly outpaces the current supply, locking out many buyers who would otherwise pursue home ownership.
Notably, despite a season of consistently declining sales, home sales are still higher than pre-pandemic levels.
Fuelling SpeculationThe stratospheric ascent of real estate prices has fuelled speculation that the market could be heading towards an imminent crash, as in previous housing booms which saw exorbitant prices in highly competitive markets.
However, many analysts believe that this market is different, and that home prices are likely to remain high for quite some time before coming back to Earth.
Morales is in agreement that an outright real estate crash is unlikely in the near term, but there could be a shift towards the middle of the decade.
Until then, many middle-class people pursuing homeownership may find themselves locked out of the market, as stiff competition from venture capitalists and private investors continues to prevent personal real estate purchasers from accessing the market.
The market for real estate remains red-hot, a testament to the unusual dynamics of the post-pandemic economy in which no one can be certain what the future holds.