The average US house price hit an all-time high of over $400,000 in May even as interest rate rises and high prices led to a fourth consecutive month of declining sales.

Existing home sales fell 3.4% last month from April to a seasonally adjusted annual rate of 5.41m, the National Association of Realtors said on Tuesday. Sales fell 8.6% from May last year, hitting a two-year low.

After climbing to a 6.49m annual rate in January, sales have fallen to the slowest pace since June 2020, near the start of the pandemic, when they were running at an annualized rate of 4.77m homes.

May’s sales were mostly closings on contracts signed one to two months ago before mortgage rates started accelerating amid a surge in inflation expectations and aggressive interest rate hikes from the Federal Reserve.

But demand for homes still outstrips supply. Even as home sales slowed, home prices kept climbing in May. The national median home price jumped 14.8% in May from a year earlier to $407,600. That’s an all-time high according to data going back to 1999, NAR said.

The housing market, a crucial part of the economy, is slowing as homebuyers facing sharply higher home financing costs than a year ago following a rapid rise in mortgage rates.

Average long-term US mortgage rates had their biggest one-week jump in 35 years with the Fed last week raising its key rate by three-quarters of a point in an attempt to combat the worst inflation in 40 years.

The average rate on a 30-year home loan climbed to 5.78% last week, the highest its been since November of 2008 during the housing crisis, according to mortgage buyer Freddie Mac.

“Today’s mortgage rates are knocking on the door of 6%,” said Lawrence Yun, NAR’s chief economist. “Given those conditions, I do anticipate further declines in home sales.”

Some real estate trends favored buyers last month. As is typical this time of year, the number of homes on the market increased in May from the previous month. Some 1.16m properties were available for sale by the end of May, up 12.6% from April, but down 4.1% from April last year.

Even so, at the current sales pace, the level of for-sale properties amounts to a 2.6-month supply, the NAR said. That’s up from 2.2 months in April, and 2.5 months a year ago. That’s still short of the four-month supply that reflects a more balanced market between buyers and sellers.

Yun expects the inventory of homes for sale will be running above year-ago levels by autumn.

This year’s pullback in home sales has led some economists to adjust their housing market outlook for 2022. Realtor.com is now expecting US home sales will decline 6.7% from last year.

That would still make 2022 the second-best year for home sales since 2007 behind 2021, according to Danielle Hale, Realtor.com’s chief economist.

Yet even with higher mortgage rates straining affordability, homes that sold did not stay on the market for long. On average, homes sold in just 16 days of hitting the market last month, the fastest sales pace tracked by the NAR. It was 17 days in April.

With inflation at a four-decade high, rising mortgage rates, elevated home prices and tight supply of homes for sale, home ownership has become less attainable, especially for first-time buyers.

First-time buyers accounted for 27% of transactions, down from 28% the previous month and 31% in May last year, the NAR said.

Real estate investors and other buyers able to buy a home with just cash, sidestepping the need to rely on financing, accounted for 25% of all sales last month, down from 26% in April, NAR said.