Home resales drop again: 9.7% in May

WASHINGTON — Existing-home sales in the U.S. plunged 9.7% in May. It was the third-straight monthly decline and further evidence of the harm the virus pandemic has done to the housing market.

The National Association of Realtors said Monday that the monthly decline pushed sales down to a seasonally adjusted annual rate of 3.91 million, the slowest pace since a homebuyers tax credit expired in October 2010. Compared with a year ago, purchases were down 26.6%, the biggest annual slide since February 2008.

Sales fell in all regions of the country, with the biggest decline coming in the Northeast where virus infections were especially heavy.

Sales of both existing and new homes have fallen sharply during the traditional spring selling season as communities were locked down to curtail the spread of the coronavirus.

Sales in the Northeast slumped 13.9% from the previous month while sales in the West fell 11.1%. Sales slid 10% in the Midwest and 8% in the South.

The median price of a home sold in May was $284,600, up 2.3% from a year ago.

Inventory rose 6.2% from a month earlier to 1.55 million but fell 18.8% from a year ago. The number of homes for sale would last 4.8 months at the current sales pace, the association said. Anything below five months is seen as a tight market.

Lawrence Yun, chief economist of the Realtors association, said that based on anecdotal reports, he believed May could turn out to be the bottom for the housing market.

“Just looking at the housing sector itself, it looks to be a V-shaped recovery,” Yun said. “For the rest of the economy, it may not be a V-shape.”

However, many private economists believe the recovery from the disruptions caused by the coronavirus could take much longer.

The biggest hit to the housing market is centered around the condominium and co-op market as sales slumped 12.8% in May to an annualized 340,000 rate. Those purchases are down almost 25% from a year earlier. The drop in single-family home sales was more moderate — 9.4% from April — to a 3.57 million pace.

Sales of previously owned homes account for about 90% of U.S. transactions and are calculated when a contract closes. New-home sales, which make up the remainder, are based on contract signings and May data will be released today.

Other recent data have shown the residential real estate market is beginning to rebound. The Mortgage Bankers Association’s weekly measure of home-purchase loan applications is currently at an 11-year high. June data from the National Association of Home Builders and Wells Fargo showed builder sentiment jumped by a record 21 points.