Existing property sales declined for the fourth month in a row due to a very low supply of apartments on the market.

Existing home sales declined 0.9% month-over-month to a seasonally adjusted annual rate of 5.8 million units in May, according to the National Association of Realtors. This is the fourth consecutive month of declines. The rate of 5.8 million is slightly above pre-pandemic levels.

Sales were 44.6% higher than the same period last year, but that comparison is massively skewed as the housing market was closed for about two months at the start of the pandemic. The market then rebounded dramatically last summer and remained strong throughout the year.

“Revenue is essentially declining towards pre-pandemic activity,” noted Lawrence Yun, chief economist for the brokers’ association. “The shortage of inventory continues to be the overwhelming dragging factor on home sales, but falling affordability is simply driving some first-time buyers out of the market.”

At the end of May there were only 1.23 million apartments for sale, a decrease of 20.6% compared to the previous year. At the current rate of sale, this corresponds to a 2.5-month offer.

Very low stocks and high demand continue to result in extraordinary price increases. The median price of an existing home was $ 350,300 in May, up 23.6% from May 2020. Not only is this the highest median price ever, it’s also the strongest annual appreciation of all time.

However, prices are skewed by the mix of sales. The market is now tending towards the upper end, where there is a much larger supply of apartments for sale. For example, house sales between $ 100,000 and $ 250,000 decreased 2% year over year, while house sales between $ 750,000 and $ 1 million increased 178%.

Sales declined in all geographic areas except the Midwest, where home prices are the lowest.

Mortgage rates fell quite sharply in April when the bulk of these contracts were signed. The average 30-year fixed-term deposit rate ended at 3.45% in March, and in early May the rate was below 3%, according to the Mortgage News Daily. That would have given buyers some additional purchasing power, but the fall in interest rates was clearly not enough to offset the sharp rise in home prices.

New home sales – based on signed contracts, not deals – were down 6% in April from March, according to the US census. The prices for these homes are up about 20% year over year.

“With four consecutive monthly declines in existing home sales, sales activity in May suggests a potential slowdown in growth for the remainder of 2021,” said George Ratiu, chief economist at realtor.com. “As inflation weighs on consumer households and the Federal Reserve suggests it may pull out of monetary easing sooner than expected, interest rates and high prices will make affordability for buyers a priority.”