The housing market double dip, heretofore confined mainly to prices, spread to sales in the month of May, according to data from the National Association of Realtors released Tuesday. The Realtors, however, said the dip was due primarily to "temporary conditions," including inclement weather in much of the country, the spike in gasoline prices and tightness of credit.
Nationally, sales of existing homes fell 3.8% to a seasonally adjusted annual rate of 4.81 million in May from a downwardly revised 5 million in April, 15.3% below the 5.68 million pace of May 2010, when the federal home-buyer tax credit was in effect, a low for 2011. The data was in line with Wall Street expectations.
Single-family sales fell 3.2% to a seasonally adjusted annual rate of 4.24 million from 4.38 million in April, 15.4% below May, 2010.
Prices fell further, with the median for all existing housing types dropping 4.6% from May, 2010 to $166,500. The median existing single-family home price was down 4.5% from last May to $166,700.
Distressed properties accounted for 31% of sales in May, down from 37% in April and flat with May 2010. All-cash transactions took a 30% share in May, down from 31% in April but up from 25% in May 2010. First-time buyers accounted for 35% of May sales, down marginally from 36% in April but well behind the 46% share in May 2010 when the tax credit was in place.Investors accounted for 19% of purchase activity in May compared, down slightly from 20% in April but up from 14% in May 2010.
Existing condo and co-op sales fell 8.1% to a rate of 570,000, 14.7% below May 2010. The median existing condo price dropped 5.8% year-oiver-year to $165,400.
Inventory at the end of May fell 1% to 3.72 million existing homes available for sale, a 9.3-month supply at the current sales pace, up from a 9-month supply in April.
The declines were led by the Midwest, where NAR chief economist Lawence Yun said weather was a significant factor in depressing activity, and by the South, by far the largest region. Sales in the Midwest dropped 6.4% in May to an annual pace of 1.02 million, 22.7% below a year ago, with the median price down 8.5% year-over0-year to $136,400. The South was down 5.1% to pace of 1.85 million, 14.4% below May 2010, with the median price down 3.1% to $149,200.
The Northeast, the smallest region, was off 2.5% from April to an annual level of 770,000, 13.5% below May 2010. The median price, however, increased 6.1% to $241,500. Sales in the West were flat at an annual pace of 1.17 million, 10% lower than a year earlier, but the median price dropped 12.6% to $192,300.
Said Yun, "Even with recent economic softness, this is a disappointing performance with home sales being held back by overly restrictive loan underwriting standards."
"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," he said. "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."
Adam Rudiger, home building analyst at Wells Fargo, took issue with that prediction in a note to investors. "We believe the likelihood of a stronger second half continues to be overestimated by some and see few near-term catalysts that would suggest such a result," he wrote. "Distressed transactions represented 31% of all sales in April, down from April's 37%, while all-cash buyers comprised 30% of all transactions--down from April's 31%. We believe the materially elevated levels in both of these metrics continue to reflect a difficult lending environment."
Buck Horne at Raymond James had a simiar take, writing in his investor note, "Looking ahead, barring an unexpected loosening of mortgage underwriting criteria or insurance premiums, we see little reason for optimism that home sales will materially improve from current levels this year."