U.S. home sales see record drop

Fewer people are buying homes in the US That's according to the latest report from the Commerce Department. Sales of new single family homes dropped unexpectedly by 11.3% in May. That's a six month low. The National Association of Realtors says home contract signings have also hit a record low. So joining me now to break this down and say we'll talk about what it means for potential home buyers is Darrell Fairweather. She is the chief economist for the real estate company Redfin. Thanks for joining us. So we've been talking about this for a while now that you know that home sales are down. But May is supposed to be when things kind of take a turn because during the springtime is when a lot of people start shopping. So what are some of the factors that economists say may be driving down demand? Do with mortgage rates. Mortgage rates had a record low during the pandemic, which meant homeowners were able to refinance and they don't want to give up those low rates. And for buyers, those high rates means that borrowing to buy a home is very expensive. And at the same time, prices are high and inventory is low. So it's a very challenging market all around. So prices still remain high because of the low inventory. Is that it? Yes, because there isn't much supply. Even though there isn't much demand, there still are high prices in the market. So then you know what needs to be done because this is contrary to the way things normally go. Usually when interest rates are high, home prices go down, so purchasing a house becomes more attainable and more desirable. What needs to change? Well, the 30 year fixed rate mortgage created a lot of security in the housing market, which insulated homeowners from these changes in interest rates. But what that means is that when interest rates are high, there's no motivation for homeowners to try to sell. It just puts the housing market into a freeze, which is what we're experiencing right now. And it's because rates went up so fast, so high. It's just short amount of time that the housing market is really in a strange place we've never been in before. So we were talking about the numbers in May, but there's reports are now showing that the number of available US homes for purchase actually rose a bit in April. So could that have an impact and be some good news for potential home buyers? It is a lining that inventory is starting to improve and we're starting to see some softening and prices with homes starting to sell for under asking price in the first time in a long time. So that's a little bit of good news for buyers. The market is starting to loosen up a bit, right? So maybe wait a little, maybe you know, you thought about buying a house in the spring, maybe wait till August and you might get some sellers that are a little anxious about unloading their property and you might get a good deal. Fingers crossed, go ahead. I think in August, rates might be lower, but there's going to be more competition. So if you wait, it's a risk. All right, Darryl Fairweather, thank you so much.