Existing Home Sales: Further Sharp Declines

Bottom Line: Existing home sales fell in May, as expected, dropping nearly 200k annualized units, continuing a trend amid sharply higher mortgage rates. While historically still low, inventories rose again and stood at 2.6 months of sales, up from 1.6 months at the start of the year.  Average and median home prices were sharply higher again as higher-end buyers could still afford homes averaging over $400k even with higher mortgage rates. Finally,  we should keep in mind that existing home sales are based on closings, and thus, these May data are lagged. Since this tally, mortgage purchase applications have fallen even further, suggesting that June and July sales will likely prove even lower.