According to the National Association of Realtors, existing home sales showed the worst result in two years, thanks to rising interest rates.

Existing home sales in May dropped 3.4%, according to the National Association of Realtors, to a seasonally adjusted, annualized rate of 5.41 million units. That is 8.6% lower than in 2021.

That is the weakest showing since the early months of the pandemic, in June 2020.

These number are based on closings during the month, so they therefore likely represent sales contracts which were signed in March and April. In that time period, the average rate on a 30-year fixed rate mortgage rose from roughly 4% to 5.5%, Currently it has risen to around 6%.

In addition, home price appreciation and low supply, have combined with rising interest rates to drive down sales.

Inventory meanwhile is beginning to rebound. NAR data shows inventory of existing homes up 36.5% since February.

New home sales are not doing much better. Sales of new homes fell 16.6%  from March to April. Median sale prices still rose, but that will likely reverse soon as supply opens up and demand drops. Median price rose 20% higher than last year, to $450,600, which drove monthly mortgage payments $720 higher, a 57% increase at todays average mortgage rate.

With home prices probably peaking, and sales declining the housing boom will now come back to earth. However given inflation, prices will probably take some time to decline to rational levels.