Existing-home sales plummet 15.3% in May

Existing-home sales fell 15.3% in May from a year ago, with the National Association of Realtors recording sales at the seasonally adjusted annual rate of 4.81  million units last month, down from 5.68 million housing units a year earlier. Month-over-month home sales fell 3.8% between April and May, with the trade group posting revised April sales figures of 5 million units. While NAR Chief Economist Lawrence Yun said the end of the homebuyer tax credit last spring siphoned off a large chunk of spring sales this year, other economic headwinds, including skyrocketing gas prices, are also slowing home sales. “Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May,” Yun 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 pace of sales activity in the second half of the year is expected to be stronger than the first half, and will be much stronger than the second half of last year.” Yun also blamed tighter underwriting guidelines for the drops, saying the pendulum swung too far the other way when it comes to safe lending practices, resulting in overly restrictive lending guidelines that are are holding back a housing recovery. “Even with recent economic softness, this is a disappointing performance with home sales being held back by overly restrictive loan underwriting standards,” he said. NAR reported that the median existing-home price hit $166,500 in May, down 4.6% from last year. Distressed homes, meanwhile, were selling on average at a 20% discount rate. “Home prices are rising or very stable in local markets with improved employment conditions, such as in North Dakota, Alaska, Washington, D.C., and many parts of Texas,” Yun noted. Write to: Kerri Panchuk.