By Nathalie Voit

The median sales price of a home in the U.S. soared above $400,000 for the first time in May as sales of existing homes tumbled amid rising mortgage-interest rates, the National Association of Realtors (NAR) said on June 21 in a press release.

According to NAR data, sales of previously owned homes fell 3.4% from April to May to a seasonally adjusted annualized rate of 5.41 million. Compared to last May, sales were down 8.6% from 5.92 million.

Unsold inventory surged to 1.16 million units by the end of May, a jump of 12.6% from April but down 4.1% from one year ago. Based on the current monthly sales pace, NAR said the total inventory of unsold homes nationwide sits at a 2.6-month supply.

Low supply has pushed the national median home price to a new high of $407,600 in May, up almost 15% from May 2021. NAR said this marks 123 successive months of year-over-year price increases and is the highest average price on record.

Despite a weakened sales forecast for the rest of the year due to higher mortgage costs, NAR Chief Economist Lawrence Yun said inventory levels still need to increase substantially “to cool home price appreciation and provide more options for home buyers.”

“Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year,” Yun said in the release. “Nonetheless, homes priced appropriately are selling quickly.”

NAR data showed properties stayed on the market an average of 16 days last month, while more than four in five homes (88%) put up for sale in May were sold within 30 days.

The housing affordability crisis is affecting first-time buyers the most. According to NAR, first-time home buyers made up just 27% of all sales in May, down from 28% in April and 31% last May.

“Higher short-term rates from the Fed are helping to drive a much-needed housing reset – a real estate refresh,” said chief economist at Realtor.com, Danielle Hale. “While the rebalancing is needed, it’s upping the challenge of navigating the housing market for both sellers and buyers as expectations and conditions are adjusting rapidly.”