Sales of existing homes nationwide fall 2.2% in May as tax credit expires

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

Sales of previously owned homes in the U.S. dropped 2.2% last month as the stimulus from a popular federal tax credit appears to have waned, a national group reported Tuesday.

Many economists expect sales and prices to fall following the expiration of the federal tax credit, which required buyers to enter into a home purchase contract by April 30 and close their deals by June 30. The credits offered up to $8,000 for first-time buyers and $6,500 for some current homeowners.

Lawrence Yun, chief economist of the National Assn. of Realtors, said sales of previously owned homes probably would remain at an elevated level through June and that job creation would be key to sustaining a healthy housing market.

The sales pace of previously owned houses, town homes, condominiums and co-ops was estimated at a seasonally adjusted annual rate of 5.66 million units in May, according to the real estate group, down 2.2% from an upwardly revised 5.79 million units in April. The May sales pace was 19.2% above the 4.75 million-unit level in May 2009.

The national median price for previously owned homes was $179,600 in May, up 2.7% from May 2009. The percentage of homes sold that were “distressed,” either bank-owned or sold when the owner was late on their mortgage payments, fell to 31% last month from 33% in April.

Housing inventory fell 3.4% in May to 3.89 million existing homes available for sale, representing an 8.3-month supply at the current pace. Raw unsold inventory rose 1.1% from May 2009 but is still 14.9% below the 4.58-million record set in July 2008.

Regionally, sales in the Northeast fell 18.3% in May from the prior month. Sales were flat in the Midwest, increased 0.5% in the South and were up 4.9% in the West.

-- Alejandro Lazo