Sales of existing homes in the United States edged up in May but activity remained muted on tighter supply and with interest rates still elevated, according to industry data released Thursday.
The rate-sensitive housing market has taken a hit as the central bank lifted the benchmark lending rate to lower stubborn inflation, while available inventory is markedly lower than pre-pandemic levels.
Analysts note that a dip in mortgage applications recently -- following a rebound in rates -- points to muted sales ahead.
Existing home sales, which form the vast majority of the US property market, rose 0.2 percent from April to a seasonally adjusted rate of 4.3 million, said the National Association of Realtors (NAR).
But from a year ago, sales were down by 20.4 percent.
"Mortgage rates heavily influence the direction of home sales," said Lawrence Yun, chief economist at the NAR.
In recent months, "relatively steady rates have led to several consecutive months of consistent home sales," he said.
Another factor, however, is available inventory and "existing-home sales activity is down sizably due to the current supply being roughly half the level of 2019," Yun said in a statement.
While total housing inventory registered at end-May was up slightly from April, this remained 6.1 percent lower than a year ago.
The median existing home price in May was $396,100, 3.1 percent below the same period last year.
As of June 15, the popular 30-year fixed rate mortgage averaged nearly 6.7 percent, according to data from home loan finance company Freddie Mac.
Although this was down from the prior week, it was higher than the year-ago period.
"The existing home market is effectively frozen, because most outstanding mortgages are financed at much lower interest rate than the prevailing rate," said Ian Shepherdson and Kieran Clancy of Pantheon Macroeconomics in a recent report.
"Any would-be sellers therefore face a huge jump in their mortgage costs," the report said, adding that many choose to stay put instead.
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