Sales of existing homes fall in May
WASHINGTON — Sales of existing homes in May fell for the third time in five months, with the weakness led by a big drop in the Northeast.
The National Association of Realtors reported Tuesday that sales of previously owned homes dropped by 1.2 percent in May to a seasonally adjusted annual rate of 6.67 million units.
The median price of the homes sold in May rose to $230,000 in May, up 6 percent from the same month a year ago. That represented a slowdown from huge double-digit price gains last year at the peak of the housing boom.
By region of the country, sales fell by the largest amount in the Northeast, a drop of 4.2 percent. Sales were down 3.8 percent in the Midwest.
Sales of existing homes managed to post small gains of 0.7 percent in the West and 0.4 percent in the South.
Analysts said this is a classic pattern for a cooling housing market with sales starting to lag under the impact of rising mortgage rates.
David Lereah, chief economist for the Realtors, said he expected sales to fall by 6.8 percent this year from last year’s all-time high. Sales had surged to record levels for five consecutive years as buyers responded to the lowest mortgage rates in four decades.
But with mortgage rates climbing steadily under the impact of credit tightening by the Federal Reserve, analysts look for housing to slow this year but not to crash.
“There’s now a clear pattern of slower home-sales activity in many high-cost markets, which are more sensitive to rises in interest rates, and higher home sales in moderately priced areas which have experienced job growth,” Lereah said.
He said that sales have slowed in such previously hot markets as South Florida and California while continuing to post sharp gains in states such as Texas, North Carolina, Georgia and Utah.
Sales of existing homes, which account for about 80 percent of the home sales market, have been posting declines for most of this year while new home sales have been rising recently, including a 4.5 percent increase for May.