Existing home sales in the United States posted their third consecutive month of steep declines recently, according to the National Association of Realtors. However, this organization also said it was optimistic that there will be a rebound in home sales later in the year after the spring season—usually a popular time for real estate—was upended by the coronavirus pandemic.

Sales of existing homes—including single-family houses, condominiums, co-ops, and townhomes—stood at a seasonally adjusted annual rate of 3.91 million in May. This pace was a drop of 9.7 percent from April and a year-over-year decline of 26.6 percent.

The slide follows existing home sales rate decreases of 17.8 percent in April and 8.5 percent in March. The April rate was down 17.2 percent from the previous year, though the March rate was up 0.8 percent annually.

"Sales completed in May reflect contract signings in March and April – during the strictest times of the pandemic lockdown and hence the cyclical low point," said Lawrence Yun, chief economist at the National Association of Realtors. "Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year."

Home prices continued to rise, marking the 99th straight month of this trend. Existing homes sold in May had a median price of $284,600, a 2.3 percent increase from May 2019.

Single-family home sales had a seasonally adjusted rate of 3.56 million, plunging 9.4 percent from the previous month and 24.8 percent from the previous year. The median home price for this type of property rose 2.4 percent from May 2019 to $287,700.

Condominium and co-op sales had an even steeper decline, with the annual rate of 340,000 unit sales marking a drop of 12.8 percent from April and 24.8 percent from May 2019. The median home price for condominiums and co-ops fell 1.6 percent from the previous year to $252,300.

"Relatively better performance of single-family homes in relation to multifamily condominium properties clearly suggest migration from the city centers to the suburbs," Yun said. "After witnessing several consecutive years of urban revival, the new trend looks to be in the suburbs as more companies allow greater flexibility to work from home."

A total of 1.55 million existing homes were listed for sale at the end of May, a 6.2 percent increase in inventory from April. However, this supply was also down 18.8 percent from May 2019.

The average home sold in May had been on the market for 26 days, one day slower than the previous month but on par with the previous year. Fifty-eight percent of homes had been on the market for less than a month before they were purchased.

Thirty-four percent of May's sales went to people buying a home for the first time. The share of first-time buyers was down from 36 percent in April but up from 32 percent in May 2019.

"New home construction needs to robustly ramp up in order to meet rising housing demand," Yun said. "Otherwise, home prices will rise too fast and hinder first-time buyers, even at a time of record-low mortgage rates."

Individual investors or those purchasing a second home accounted for 14 percent of May's transactions, up from 10 percent in the previous month and 13 percent in the previous year. These buyers typically buy a home without financing, and the share of all-cash sales stood at 17 percent – up from 15 percent in April but down from 19 percent in May 2019.

Distressed sales, including foreclosures and short sales, made up 3 percent of May's transactions. This share was relatively unchanged from April but up slightly from 2 percent in May 2019.

Mortgage rates remained low, with Freddie Mac determining that the average commitment rate for a 30-year fixed rate mortgage in May was 3.23 percent. This was down from 3.31 percent in April and 3.94 percent for 2019 as a whole.

In the National Association of Realtors' regional breakdown, existing home sales in the Northeast had an annual rate of 470,000 – down 13 percent from April and 29.9 percent from May 2019. The median home sale price in the region was $327,900, a year-over-year increase of 7.8 percent.

The South had the smallest monthly decline in sales, with its annual rate of 1.73 million representing an 8 percent drop from April. However, this was also a year-over-year decline of 25.1 percent. Homes sold for a median price of $247,400, up 2.1 percent from the previous year.

The West was the only region where home prices contracted, with the median sale price of $408,400 representing a year-over-year drop of 0.2 percent. The annual existing home sales rate in the West was 720,000, down 11.1 percent from the previous month and 35.1 percent from the previous year.

In the Midwest, the existing home sales rate fell 10 percent from April and 20.2 percent from May 2019 to 990,000. The median home sale price of $227,400 was an annual increase of 3 percent.