Record high prices, rising mortgage rates depress US home sales

U.S. existing home sales fell for a third straight month in May as record-high prices and a resurgence in mortgage rates sidelined potential buyers from the market.

There was, however, some encouraging news on the housing market, with the National Association of Realtors reporting on Friday that housing inventory jumped last month to the highest level in nearly two years. Rising supply, if sustained, could curb further price gains and improve affordability.

Nonetheless, weak home sales added to a sharp drop in housing starts and building permits last month in suggesting that a re-acceleration in mortgage rates from April through May had sapped momentum from the housing market recovery.

“Poor affordability and still-low, though rising listings in the resale market are keeping buyers at bay, with little change expected until the Federal Reserve reduces policy rates,” said Sal Guatieri, a senior economist at BMO Capital Markets.


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