Sales of previously owned homes have hit a 30-year low, remaining stagnant in May due to soaring prices and high mortgage rates.

The National Association of Realtors (NAR) reported that existing home sales in May were essentially flat, dropping 0.7% from April to an annualized rate of 4.11 million units. Compared to May of last year, sales decreased by 2.8%.

This decline in closed sales, based on contracts signed in March and April, coincided with a sharp rise in mortgage rates during April. The average rate on a 30-year fixed loan began April just below 7%, peaked at over 7.5% mid-month, and then slightly decreased in May. Currently, the rate hovers around 7%, according to Mortgage News Daily.

“Home sales refuse to recover,” said Lawrence Yun, NAR’s chief economist, expressing surprise at the lack of a spring recovery.

Regionally, sales remained unchanged except in the South, where they fell by 1.6%.

In contrast, the inventory of homes for sale rose significantly, increasing 6.7% month-to-month and 18.5% year-over-year. This growth brings the current supply to a 3.7-month level, which, although higher, remains low given the current demand and demographic trends.

Yun suggested that more inventory could eventually boost sales and moderate price increases, offering more choices for buyers.

Despite the increased supply, demand continues to drive prices upward. The median price of an existing home sold in May was a record-high $419,300, marking a 5.8% year-over-year increase. This price surge, the strongest since October 2022, was observed across all regions.

The NAR highlighted that the mortgage payment for a typical home today is more than double what it was five years ago. This surge is due to both higher interest rates and home prices, which have risen by over 50% in the same period. The median price trend is being pushed up by sales of higher-end homes.

Sales of homes priced below $250,000 have decreased from a year ago, while those priced between $250,000 and $500,000 have risen slightly by 1%. Homes priced between $750,000 and $1 million saw a 13% increase in sales, and sales of homes over $1 million surged by nearly 23%.

Cash purchases continue to dominate the market, accounting for 28% of sales. First-time buyers made up 31% of sales, an increase from 28% the previous year.

Despite high prices, competition remains fierce, with two-thirds of homes going under contract in less than a month. However, an increasing number of listings are becoming stagnant, as noted by Redfin, a real estate brokerage. Homes that are well-priced and in good condition sell quickly, while others linger on the market longer.