Existing Home Sales Drop Unexpectedly
Another sign of weakness in the housing market: This morning, the National Association of Realtors said that sales of existing homes declined 2.2 percent from April to May. NAR revised its estimate of April sales — bolstered by the end of the Obama administration’s homebuyer tax credits — up to 5.79 million units, 8 percent higher than March. All in all, 5.66 million homes sold in May, 19.2 percent more than a year before.
You might wonder: Given that the tax credit ended at the end of April and mortgage applications have plummeted, shouldn’t sales have dropped more in May? Not really. The May numbers reflect completed sales — and mortgage applications and other paperwork takes some time to process. Though the tax credit ended, May’s numbers are still elevated, and June’s will be as well. That is why the softening of sales seems ominous and was unexpected.
“We are witnessing the ongoing effects of the home buyer tax credit, which we’ll also see in June real estate closings,” Lawrence Yun, NAR chief economist, explained in a released statement.