A drop in existing home sales to a six-month low in May is highlighting the recent slowdown in the recovery.
Existing home sales fell 3.8% to a seasonally adjusted annual rate of 4.81 million in May from a downwardly revised 5.00 million units in April. That’s 15.3% below a year ago when the home buyer tax credit distorted the market and shifted sales into the spring from the summer.
Additionally, the National Association of Realtors reported that the total supply of houses available based on current sales increased from 9.0 months to 9.3 months.
May’s numbers as well as the recent trend in existing home sales, which make up over 90% of total sales, reveal that there just hasn’t been much good to say about the current state of housing.
Potential buyers either can’t move because their current home has no equity or they are worried about the direction of home prices. And historically low interest rates have done little to spark any interest.
And as the chart above suggests, the recent rise in inventory could put additional pressure on prices.
Unfortunately, I’ll end this post on a downer: last month’s pending home sales number suggested a big drop in sales is on tap for the current month.
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