From the NY Times:
Sales of previously owned homes hit a six-month low in May and the supply rose, pointing to a housing market still struggling to regain its footing.
The National Association of Realtors said on Tuesday that sales slipped 3.8 percent month over month to an annual rate of 4.81 million units, the lowest since November.
It was the second straight month of declines. The drop was smaller than economists had expected, but the April sales figure was revised lower, leaving a report that was largely in line with expectations in financial markets.
While the fall in sales last month was partly a result of tornadoes and flooding, with sales in the Midwest and South hit the hardest, it underscored fundamental weakness.
“It’s indicative of the depressed housing demand that we have been seeing for some time, and that’s a function of the slow economic recovery and tight credit markets,” said Michelle Meyer, an economist at Bank of America Merrill Lynch in New York.
At May’s weak sales pace, it would take 9.3 months to clear the inventory of previously owned homes on the market. That is up from a nine-month supply in April.
The report was the latest to confirm a sustained weakness in the economy through the second quarter, which has been marked by a sharp slowdown in regional factory activity, soft retail sales and anemic employment growth.
But the smaller-than-expected decline in sales was yet another hopeful sign that the economy was set to regain momentum in the second half of the year.
In the 12 months to May, home resales were down 15.3 percent.
Sales of existing homes fell 3.8 percent in May, not as deep a drop as some had forecast, to a seasonally adjusted annual rate of 4.81 million units.
April’s figure was revised down to 5 million.
Potential homebuyers continue to be held back by tough credit standards and poor confidence. Sales activity was 15.3 percent below the pace set in May of 2010, when buyers were rushing to take advantage of the home buyer tax credit.
“Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May,” said Lawrence Yun, chief economist for the National Association of Realtors.
The national median existing-home price for all housing types was $166,500 in May, down 4.6 percent from May 2010. Home prices continue to be pressured by the large supply of distressed properties, which typically sold at a discount of about 20 percent in May. Foreclosures and short sales, where the home is sold for less than the value of the mortgage, accounted for 31 percent of sales in May, down from 37 percent in April.
“The price decline could be diminishing, as buyers recognize great bargain prices and the highest affordability conditions in 40 years; this will help mitigate further price drops,” Yun said. Distressed sales vary market to market, with some of the hardest hit areas of the housing crash seeing far higher shares of these purchases. That may be a factor in regional sales differences.
Regionally, existing-home sales in the Northeast declined 2.5 percent, in the Midwest dropped 6.4 percent and were down 5.1 percent in the South. Sales, however, were unchanged in the West, where distressed sales are a far higher percentage of the market, and where investors are out in force.