Tuesday, June 21, 2011

Existing Home Sales Fall 3.8% and Inventories Hit 9.3 Months

Existing home sales fell 3.8% in May to an annualized sales pace of 4.81 million units, continuing their recent downward trend. For three out of the last four months, existing home sales fell and, in May, were at their lowest since November (4.64 million units).

Due to this decrease in sales, the months supply of inventory rose slightly to 9.3 from 9.0. The long-term inventory supply ratio has historically been around 5 months.

The median sale price in May rose from $161,100 in April to $166,500, however was down 4.6% from a year prior. The end of price declines represents a silver lining, although the increase in price may be at least in part due to a change in the mix of houses sold, and not necessarily because home values have risen this much. The housing market is lagging other parts of the economy and remains soft with excess inventories still prevalent.

ABA Chief Economist James Chessen commented, “With an unemployment rate over 9% and worries about the economy slowing further, there’s little enthusiasm for people to make big purchases, such as a home.”

Source: The National Association of Realtors.

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