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US existing home sales rise 2.0% in May
Sales of existing US homes rose a surprising 2.0 percent in May from April amid falling home prices, the National Association of Realtors (NAR) said on Thursday.
The improved monthly data for the battered real-estate sector offered a fleeting glimpse of relief from a severe and prolonged slump that has resulted in spiking foreclosures and credit turmoil.
The May reading of a seasonally adjusted annual rate of 4.99 million units exceeded analysts' consensus forecast of a rise to 4.95 million units.
Though better than April's pace of 4.89 million units, the number of existing homes sold last month was 15.9 percent below the 5.93 million-unit pace in May 2007, NAR said.
"Home buyers are starting to get off the fence and into the market, drawn by drops in home prices in many areas and armed with greater access to affordable mortgages," NAR president Richard Gaylord said in a statement.
The national median existing home price was 208,600 dollars in May, down 6.3 percent from a year ago when the median was 222,700 dollars.
Lawrence Yun, NAR chief economist, highlighted a glut of inventory in the market two years after the real estate collapse.
"The large supply of homes on the market clearly favours buyers, and it should take several months to draw the inventory down," he said.
"Stabilisation in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets. Foreclosures and short sales appear to be a larger part of the market, particularly in California, and are creating a drag on current home prices."
Inventory of existing homes for sale at the end of May fell 1.4 percent to 4.49 million units, which represents a 10.8-month supply at the current sales pace, down from a 11.2-month supply in April.
"The excess supply remains at a high level and still suggests that the downward correction in prices is not over," said Amine Tazi, an economist at Natixis.
Existing home sales rose across most of the country but remained in double-digit declines from sales in May 2007.
By region, existing home sales rose 5.5 percent in the Midwest, 4.6 percent in the Northeast and 2.0 percent in the West, but fell 0.5 percent in the South.
"It'd be premature to say the improvement marks a turnaround," NAR's Yun said. "The market is fragile."
A closely watched survey of home prices in 10 major US metropolitan areas released this week showed a deepening fall in home values.
The Standard & Poor's/Case-Shiller Home Price Indices reported a record decline of 16.3 percent in home prices in April from a year ago.
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