Existing home sales rose modestly in May, the National Association of Realtors reported Monday, a welcome improvement but one marred by continued signs of stress in the housing sector.
Powered by single-family homes, existing-home sales rose by annualized rate of 4.9 percent last month to 4.89 million, up from 4.66 million in April, the Realtors’ group said.
“Home buyers are benefiting from slower price growth due to the much-needed, rising inventory levels seen since the beginning of the year,” said Lawrence Yun, chief economist for the group. “Moreover, sales were helped by the improving job market and the temporary but slight decline in mortgage rates.”
Despite the improvement, existing-home sales were still 5 percent below May 2013 levels.
And there was another bit of sobering news in Monday’s numbers.
“The share of cash-only purchases held firm at 32 percent, despite a drop in investors’ share of purchases, signaling that refinancing remains a major hurdle for many families,” observed Stephanie Karol, a U.S. economist for forecaster IHS Global Insight. “The share of first-time buyers was the primary cause for concern in this report: it fell 2 percentage points in May to 27 percent. The existing home sales market can only retain its strength for so long if move-up buyers cannot find a first-time buyer to purchase their starter homes.”
Offsetting that grim data point, sales of distress homes_ foreclosures and short sales in which banks take some loss on a mortgage_ accounted for about 11 percent of May sales. That’s down from 18 percent a year earlier. Foreclosures sold for an average discount of about 18 percent below market value last month, the Realtors’ group reported.