Pending home sales fell 2.1% in May, median price to hit $405,300

(The Center Square) – Pending home sales fell 2.1% in May, according to the National Association of Realtors.

NAR Chief Economist Lawrence Yun said home prices could dip in the coming months.

"The market is at an interesting point with rising inventory and lower demand," he said. "Supply and demand movements suggest easing home price appreciation in upcoming months. Inevitably, more inventory in a job-creating economy will lead to greater home buying, especially when mortgage rates descend."

NAR predicts mortgage rates will remain above 6% in 2024 and 2025, even with the Federal Reserve cuts to the Fed Funds rate. It further forecasts that existing-home sales will rise to 4.26 million in 2024 (from 4.09 million 2023) and to 4.92 million in 2025 (from 2024).

Housing starts are expected to rise to 1.382 million in 2024 (from 1.413 million in 2023) and to 1.492 million in 2025 (from 2024), according to NAR.

NAR anticipates the median existing-home price will increase to a record annual high of $405,300 in 2024 (from $389,800 in 2023) and to $412,000 in 2025 (from 2024). NAR forecasts increases in the median new home price to $434,100 in 2024 (from $428,600 in 2023) and $441,200 in 2025.

"The first half of the year did not meet expectations regarding home sales but exceeded expectations related to home prices," Yun said. "In the second half of 2024, look for moderately lower mortgage rates, higher home sales and stabilizing home prices."