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US existing-home sales fall in May

WASHINGTON : Sales of previously owned US homes fell in May amid persistent financing problems in the depressed sector,

Published June 21, 2011 Updated June 21, 2011 06:25pm

2 min

By Imad Uddin

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Existing-home sales dropped 3.8 percent from April to a seasonally adjusted annual rate of 4.81 million, the National Association of Realtors (NAR) said in a monthly report.

The sales pace was slightly below analysts' average estimate.

Despite mortgage rates near historic lows and rock-bottom home prices, would-be homebuyers face high unemployment -- 9.1 percent in May -- and faltering economic growth.

NAR also revised lower the April rate to 5.0 million, and said tight credit and temporary factors weighed on the market in May.

"Even with recent economic softness, this is a disappointing performance with home sales being held back by overly restrictive loan underwriting standards," said Lawrence Yun, NAR chief economist.

"There's been a pendulum swing from very loose standards which led to the housing boom to unnecessarily restrictive practices as an overreaction to the housing correction -- this overreaction is clearly holding back the recovery."

Yun said spiking gasoline prices and widespread severe weather had hurt house shopping in April, leading to weak figures for actual closings in May.

But a recent easing in oil prices could help boost sales, especially in the second half of the year, he said.

"Current housing market activity indicates a very slow pace of broader economic activity, but recent reversals in oil prices are likely to mitigate the impact going forward."

The pick-up in the second half of the year "will be much stronger than the second half of last year," he predicted.

May sales were 15.3 percent below the year-ago rate, when a temporary federal government homebuyer tax-credit program spurred sales.

The national median of prices of all types of previously owned housing was $166,500 in May, down 4.6 percent from May 2010.

And the glut of homes on the market rose. By the end of May, 3.72 million existing homes were available for sale, which represents a 9.3-month supply at the current sales pace, up from a 9.0 month supply in April.

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