One major aspect of the US housing market perked up in May, according to figures from the NAR.
Figures from the National Association of Realtors (NAR) have revealed that sales of existing homes- which account for the bulk of the market – rose slightly in May, only the second increase in the past 10 months.
Prices, however, kept plunging and analysts said the large number of unsold homes indicated the prolonged slump in housing was far from over. The NAR figures showed that:
– Sales of existing single-family homes and condominiums edged up by 2 percent to a seasonally adjusted annual rate of 4.99 million units in May.
– Even with the small gain, it was still 15.9 percent below the depressed levels of a year ago.
– The median price of an existing home sold in May dropped to $208,600.
The NAR figures followed news that sales of new single-family homes fell by 2.5 percent in May. That was the sixth drop in the past seven months and pushed the annual sales pace down to 512,000 units.
Lawrence Yun, chief economist at the NAR noted: "Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets.
"Foreclosures and short sales – when a home is sold for less than the value of the mortgage – are a larger portion of the current housing market, particularly in California, and are depressing home prices".
Dragging down the economy
Ian Shepherdson, chief U.S. economist at High Frequency Economics , added: "The two-year slump in housing has dragged down the economy and rising levels of foreclosures are dumping even more unsold homes on the market.
"Plunging prices and massive inventory are huge disincentives to home buying. Falling consumer confidence, rising job layoffs and higher mortgage rates are standing in the way of a housing rebound".