May Existing Home Sales

Updated 23-Jun-09 10:26 ET

Highlights

Existing home sales for May increased 2.4% from April to an annualized rate of 4.77 million units. That was slightly below the consensus estimate of 4.82 million, so the headline print will be considered a disappointment.
The uptick in May was the third straight monthly increase. Separately, the level of 4.77 million units was ahead of the 3-month average of 4.66 million units, which lends support to the stabilization argument.
The affordability factor again proved helpful to sales activity as the median home price was down 17% from a year ago to $173,000 while 30-year fixed mortgage rates in April and most of May were below 5.00%.
Distressed sales accounted for 33% of all purchases, which was down from 45% in April. At the current sales pace, the supply of unsold existing homes stands at 9.6 months versus 10.1 months in April.
By region, sales were up 3.9% in the Northeast and up 9.0% in the Midwest. They were flat in the South and down -0.9% in the West.

In general, this report didn't live up to heightened expectations. The specter of a slowdown in home sales in coming months due to rising mortgage rates, and the expectation that unemployment will continue to increase, are tempering the enthusiasm placed behind the housing recovery argument.

Existing home sales remain at very depressed levels. The current levels have been supported by lower prices and foreclosure sales. Sales may well have bottomed, but that will not bring much cheer at these levels. Further price declines are also likely.

Category	MAY	APR	MAR	FEB	JAN
Existing Home Sales	4.77M	4.66M	4.55M	4.71M	4.49M
Months Supply	9.6	10.1	9.6	9.7	9.7
Median Price Y/Y	-16.8%	-17.2%	-15.1%	-14.1%	-17.5%