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Existing-Home Sales Fall Steeply, Routing Hopes

Existing home sales dropped to 4.55 million in May while the median price of an existing home rose to $182,600, the ""National Association of Realtors"":http://www.realtor.org/ reported Thursday.

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The decline in the seasonally adjusted annual rate of sales was the third in the last four months and steeper than expected. Economists surveyed by Bloomberg forecast 4.57 million in sales.

Despite the month-over-month decline, existing-home sales continue a steady, longer-term increase. Sales have averaged 4.574 million in the last five months, compared with 4.358 million in the previous five months and 4.274 million in the first five months of 2011.

The median price of an existing home climbed 5.1 percent from April to its highest level since October 2008 when it was $186,400. The median price is up 7.9 percent in the last year, the strongest year-over-year increase since February 2006 when it showed an 8.3 percent year-over-year increase.

The inventory of homes for sale in May fell to 2.49 million, bringing the month's supply of homes on the market to 6.6 from 6.5 in April.

Even with the month-over-month drop in sales, the NAR said May sales were up 9.6 percent in the last year.

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Sales in April had shown a 10.0 percent year-year growth.

Distressed homes - foreclosures and short sales sold at deep discounts - accounted for 25 percent of May sales (15 percent were foreclosures and 10 percent were short sales), down from 28 percent in April and 31 percent in May 2011, NAR said. Foreclosures sold for an average discount of 19 percent below market value in May, while short sales were discounted 14 percent.

Total housing inventory, as tracked by NAR, slipped 0.4 percent from the end of April to the end of May Listed inventory, NAR said, is 20.4 percent below a year ago when there was a 9.1-month supply. Unsold inventory has trended down from a record 4.04 million in July 2007; supplies reached a cyclical peak of 12.1 months in July 2010.

Anecdotal evidence though suggests there is still a large ""shadow"" inventory of homes available for sale, especially bank-owned properties.

Regionally, existing-home sales fell in May in three of the four Census regions, improving only in the Midwest and there by a scant 1.0 percent from April.

Sales fell 4.8 percent month-month in the Northeast, 3.4 percent in the West and 0.6 percent in the South. Sales were up year-year in every region led by a 19.5 percent surge in the Midwest and followed by gains of 9.2 percent in the South, 7.3 percent in the Northeast and 3.6 percent in the West.

The median price of an existing home rose month-over-month and year-over-year in all four regions. The median price of an existing home in the South cracked the $200,000 barrier for the first time since last June, increasing to $206,000, a 7.1 percent year-over-year gain.

The median price of an existing home in the West rose to $281,200, up 9.6 percent in the last year, to $178,100 in the Midwest, up 4.9 percent in the last year and to $288,400 in the Northeast, up 2.5 percent in the last year.

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.
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