Sales of Existing Homes Hit Six-Month Low in May

The National Association of Realtors said on Tuesday that sales slipped 3.8 percent month over month to an annual rate of 4.81 million units, the lowest since November.

It was the second straight month of declines. The drop was smaller than economists had expected, but the April sales figure was revised lower, leaving a report that was largely in line with expectations in financial markets.

While the fall in sales last month was partly a result of tornadoes and flooding, with sales in the Midwest and South hit the hardest, it underscored fundamental weakness.

“It’s indicative of the depressed housing demand that we have been seeing for some time, and that’s a function of the slow economic recovery and tight credit markets,” said Michelle Meyer, an economist at Bank of America Merrill Lynch in New York.

At May’s weak sales pace, it would take 9.3 months to clear the inventory of previously owned homes on the market. That is up from a nine-month supply in April.

The report was the latest to confirm a sustained weakness in the economy through the second quarter, which has been marked by a sharp slowdown in regional factory activity, soft retail sales and anemic employment growth.

But the smaller-than-expected decline in sales was yet another hopeful sign that the economy was set to regain momentum in the second half of the year.

In the 12 months to May, home resales were down 15.3 percent.

There were 3.72 million previously owned homes on the market in May, excluding so-called shadow inventory.

The month’s supply was the highest in six months and a supply of six to seven months is generally considered ideal, with higher readings pointing to lower house prices.

The generally weak housing market tone was underscored by the median home price, which at $166,500 was 4.6 percent lower than a year earlier. That compared with a 6.6 percent decline in April.

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