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U.S. Existing Home Sales Plunge More Than Expected In May

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Existing home sales in the U.S. tumbled by much more than anticipated in the month of May, according to a report released by the National Association of Realtors on Monday.

NAR said existing home sales plunged by 9.7 percent to an annual rate of 3.91 million in May after plummeting by 17.8 percent to a rate of 4.33 million in April. Economists had expected existing home sales to slump by 4.8 percent to a rate of 4.12 million.

Existing home sales declined for the third straight month and are down by 26.6 percent compared to the same month a year ago.

"Sales completed in May reflect contract signings in March and April - during the strictest times of the pandemic lockdown and hence the cyclical low point," said Lawrence Yun, NAR's chief economist.

He added, "Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year."

The report said the median existing home price in May was $284,600, down 0.7 percent from $286,700 in April but up 2.3 percent from $278,200 in May of 2019.

NAR also said there were 1.55 million homes for sale at the end of May, up 6.2 percent from 1.46 million at the end of April but down 18.8 percent from 1.91 million a year ago.

The unsold inventory represents 4.8 months of supply at the current sales rate compared to 4.0 months of supply in April and 4.3 months of supply in May of 2019.

"New home construction needs to robustly ramp up in order to meet rising housing demand," Yun said. "Otherwise, home prices will rise too fast and hinder first-time buyers, even at a time of record-low mortgage rates."

The report also said single-family home sales plunged by 9.4 percent to an annual rate of 3.57 million in May, while existing condominium and co-op sales plummeted by 12.8 percent to a rate of 340,000.

On Tuesday, the Commerce Department is scheduled to release a separate report on new home sales in the month of May.

Economists expect new home sales to jump by 2.7 percent to an annual rate of 640,000 in May after rising by 0.6 percent to a rate of 623,000 in April.

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