The housing market may have finally reached its tipping point as new figures show rising prices may be behind a decline in sales last month. Sales of previously owned homes dropped in May, the second consecutive month of declines. May is historically the kickoff month for the summer home buying season but the drop in sales may be a signal that rising prices and chronically low inventory are changing all of that.
According to the National Association of Realtors, existing home sales fell 0.4 percent in May from the prior month. This comes as a surprise to economists who had predicted in a survey by The Wall Street Journal that sales would actually post gains. Sales are down three percent on a year-over-year basis.
"Incredibly low supply continues to be the primary impediment to more sales," said Lawrence Yun, chief economist for the NAR. "But there's no question the combination of higher prices and mortgage rates are pinching the budgets of prospective buyers.
Today, conforming no-point 30-year fixed mortgage rates are averaging 4.5 percent, 15-year rates are near 4.0 percent and the 5-year ARM is averaging 4.0 percent.
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