The consensus read on the US housing market is that mortgage rates are the villain keeping existing home sales frozen at multi-year lows. Strip out the rate narrative, though, and the data released by the National Association of Realtors for May tells a more awkward story: prices remain the primary constraint, supply is accumulating at levels not seen in over a decade, and the market’s two segments, single-family homes and condos, are behaving quite differently from each other.
Single-Family Supply at a Nine-Year High for May
Sales of existing single-family homes that closed in May rose by 3.5% from April on a seasonally adjusted basis, to an annual rate of 3.80 million. That figure sits in the same rock-bottom range that has prevailed since the second half of 2022, according to data from the National Association of Realtors. Year-over-year, the gain is a modest 3.3%, but set that against the longer run: sales remain roughly 20% below May 2019 levels and nearly 27% below May 2021. The year-on-year number flatters; the five-year comparison does not.
Supply of single-family homes rose to 4.5 months in May, matching May 2020 and representing the highest supply for any May since 2016. Supply is a function of both inventory and sales: inventory has been rising while demand has hobbled along near the floor, so the ratio deteriorates from the seller’s perspective with each passing month. That dynamic is not priced into the dominant narrative, which still treats this primarily as a rate story.
Regional divergence is sharp. The West and Northeast remain the worst-performing regions relative to pre-pandemic norms, with combined existing-home sales (all types) still running roughly 32% and 31% below May 2019 levels respectively. The Northeast’s seasonally adjusted annual rate of sales ticked up only marginally in May, to 460,000, sitting just above a record low in NAR data going back to 1999. The NAR’s own May data shows the Northeast median price reached $534,900, up 4.2% year-over-year: high prices in a low-volume market, not a recipe for recovery.
The South offers the most apparent signs of life. The seasonally adjusted annual rate of sales there rose 3.2% in May from April, to 1.96 million homes, and the year-over-year gain of 5.9% leads the four regions. Yet even the South is running 15% below May 2019. Crucially, according to Realtor.com Research, new listings in the South increased 10.2% in May, the fastest pace of any region. More supply chasing still-subdued demand is not straightforwardly bullish for prices in that market.
Condo Data Has a Credibility Problem
The condo segment raises a separate concern, and it is methodological rather than purely economic. Sales of condos and co-ops held at a seasonally adjusted annual rate of 370,000 for the fourth consecutive month, near the very bottom of a data series that runs only to late 2011. That is uncomfortable enough on its own. The supply figure, however, is harder to trust in its initial release.
NAR revised April condo supply up to 6.3 months, from an originally reported 4.5 months, a revision of nearly two full months. This pattern has repeated every month this year: the initially reported figure comes in as an outlier on the low side, then is revised substantially higher roughly a month later. For May, NAR has reported supply of 4.6 months. On the pattern established across the preceding months, the May figure is likely to be revised to something in the vicinity of 6.4 months when June data is released. Readers relying on the headline print are, in effect, reading stale and understated data each month.
Condo prices at the local level compound the picture. From their respective peaks, condo prices have declined by between 15% and 33% across 24 markets, with Cape Coral, FL down 33%, Oakland, CA down 31%, and Austin, TX off 27%. Several of those markets have now fallen below their 2006 highs.
The Rate Alibi Looks Thinner Under Scrutiny
The prevailing line holds that once mortgage rates fall, buyers will return. The NAR’s own May data complicates that. The 30-year fixed-rate mortgage averaged 6.44% for the month of May, per NAR, and ticked up only to 6.48% as of 4 June, according to Freddie Mac. These are not historically elevated figures: in the decades before the Federal Reserve’s quantitative easing programme began in 2009, mortgage rates at 6.5% were unremarkable. What was extraordinary was the sub-3% era of 2020 to 2022, which inflated the national median price of single-family homes by 41% between June 2020 and June 2022.
Those prices have not unwound at the national level. The national median for single-family homes rose 1.3% year-over-year in May to $434,300, kept aloft by gains in markets such as New York City (+5.1%) and Chicago (+3.9%), which offset declines of 20% to 26% in places such as Austin and Oakland. NAR notes that income gains have been slightly outpacing home-price growth lately in most areas, a marginal improvement in affordability that is real but unlikely to unlock the market in scale while prices remain 41% above their pre-pandemic trajectory. The rate alibi lets a price problem off the hook.
