Home sales finally picked up in May, but don’t pay too much attention…

“Perhaps the biggest problem is the persistent lack of housing supply,” she said. “Existing homes make up about 90% of the inventory, but existing owners are staying put. The average tenure in the United States is over 10.5 years. Fewer existing homeowners selling means fewer homes for sale and ultimately fewer sales.

As mortgage rates rise, existing homeowners find themselves locked in “golden handcuffs,” Potapov added: “They have little financial incentive to sell their home only to buy a new one at a much higher mortgage rate. This is the rate locking effect.

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In the coming months, Potapov added, potential home buyers will be sensitive to sharp swings in mortgage rates. Then, another ray of hope: “The general direction is towards the normalization of the housing market.”

According to the NAHB, a new home sale occurs when a sales contract is signed or a down payment is accepted. The house can be at any stage of construction: not yet started, under construction or completed. Along with adjusting for seasonal effects, May’s reading of 696,000 units is the number of homes that would sell if this pace continued over the next 12 months.