Citing supply constraints rather than softening demand, the National Association of Realtors released a report Thursday morning showing a slightly bigger than expected drop in U.S. existing home sales in the month of May.
NAR said existing home sales fell by 1.5 percent to a seasonally adjusted annual rate of 4.55 million in May from 4.62 million in April. Economists had expected a slightly more modest decrease to an annual rate of 4.57 million.
Lawrence Yun, NAR chief economist, said, "The slight pullback in monthly home sales is more likely due to supply constraints rather than softening demand. The normal seasonal upturn in inventory did not occur this spring."
"Even with the monthly decline, home sales have moved markedly higher with 11 consecutive months of gains over the same month a year earlier," he added.
The report showed that existing home sales in May were up by 9.6 percent compared to the 4.15 million unit rate in the same month a year ago.
NAR said total housing inventory slipped 0.4 percent to 2.49 million existing homes available for sale at the end of May.
The inventory level represents 6.6 months of supply at the current sales pace, up from 6.5 months of supply in April but well below the 9.1 months of supply in May of 2011.
"The recovery is occurring despite excessively tight credit conditions and higher downpayment requirements, which are negating the impact of record high affordability conditions," Yun said.
The report also showed that the national median existing-home price came in at $182,600 in May, up 5.1 percent from $173,700 in April and up 7.9 percent from $169,300 a year ago.
Existing single-family home sales slipped 1.0 percent to an annual rate of 4.05 million in May, while existing condominium and co-op sales fell 5.7 percent to an annual rate of 500,000.
The drop in existing home sales was partly due to notable decreases in sales in the Northeast and the West, where existing home sales fell by 4.8 percent and 3.4 percent, respectively.
Existing home sales in the South showed a more modest 0.6 percent decrease, while existing home sales in the Midwest rose by 1.0 percent.
Next Monday, the Commerce Department is scheduled to release its report on new home sales in the month of May. New home sales rose 3.3 percent to an annual rate of 343,000 in April from the revised March rate of 332,000.
by RTT Staff Writer
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