US May existing home sales 5.41m vs 5.40m expected

  • Prior was 5.61m
  • Inventory 2.6 months vs 2.2 months prior
  • Median price $407.6K vs $391.4K prior
  • Prices +14.8% y/y
  • Full report

The numbers represent closings, which were likely contracts signed in March/April. It’s a lagging indicator from back when mortgage rates were lower.

Today, US home builder Lennar reported and CEO Stuart Miller said:

“While our second quarter results demonstrate strength and excellent performance throughout the quarter, the weight of a rapid doubling of interest rates over six months, together with accelerated price appreciation, began to drive buyers in many markets to pause and reconsider. We began to see these effects after quarter end.”

“The Fed’s stated determination to curtail  inflation  through interest rate increases and quantitative tightening have begun to have the desired effect of slowing sales in some markets and stalling price increases across the country. While we believe that there remains a significant shortage of dwellings, and especially workforce housing, in

the United States


, the relationship between price and interest rates is going through a rebalance.”

“Accordingly, we are laser focused on traffic, affordability, the quality of our backlog, along with cancellation rates and completed, unsold inventory levels which, to date, are both at low levels. Additionally, we are focused on balance sheet strength as we ended the quarter with

$1.3 billion

in cash, no borrowings on our

$2.6 billion

revolver and homebuilding debt to capital of 17.7%. Our balance sheet has never been in a stronger position than it is today.”

Here’s a comment from the release from NAR chief economist Lawrence Yun:

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. “Nonetheless, homes priced appropriately are selling quickly and inventory levels still need to rise substantially – almost doubling – to cool home price appreciation and provide more options for home buyers.”