LITTLE ROCK — Sales of previously owned U.S. homes declined in May, showing an uneven recovery in residential real estate.
Purchases of existing properties dropped 1.5 percent to a 4.55 million annual rate last month, the National Association of Realtors said Thursday. The median forecast of economists surveyed by Bloomberg News called for a 4.57 million pace.
The weakest employment gain in a year last month and limited access to credit are restraining a housing industry that’s been supported by record-low borrowing costs and cheaper properties that are drawing investors.
“There’s a gradual bleeding into the market of distressed properties,” said Michelle Meyer, a senior U.S. economist at Bank of America Corp. in New York. “It’s a bumpy trajectory” for housing. “It’s going to be a gradual recovery.”
Estimates in the Bloomberg survey of 74 economists ranged from 4.40 million to 4.73 million.
Sales of previously owned homes, tabulated when a contract closes, have climbed since reaching a low of 3.39 million at an annual rate in July 2010. In the buildup to the subprime lending collapse and recession, purchases reached a peak of 7.25 million in September 2005.
The median price of a previously owned home climbed 7.9 percent to $182,600 in May, the highest since June 2010, from $169,300 in May 2011, Thursday’s report showed.
The increase in May reflected more sales of higherpriced properties, according to Lawrence Yun, chief economist of the Realtors group.
The number of previously owned homes on the market decreased 0.4 percent to 2.49 million in May from a month earlier. At the current pace, it would take 6.6 months to sell existing inventory, compared with 6.5 months at the end of the prior period.
Sales of single-family homes decreased 1 percent to an annual rate of 4.05 million, while condominiums and coop transactions fell 5.7 percent to a 500,000 pace.
Three of four regions showed sales declines, led by a 4.8 percent drop in the Northeast. Purchases also fell in the West and South.
Of all purchases, cash transactions accounted for about 28 percent, down from 29 percent in April. Distressed sales, made up of foreclosures and short sales in which the lender agrees to a transaction for less than the balance of the mortgage, accounted for 25 percent of the total last month, the lowest since the group began tracking the data in 2008, down from 28 percent in April.
Investors accounted for 17 percent of purchases in May, a decrease from 20 percent in April. First-time buyers accounted for 34 percent of the market in May.
“First-time buyers are really not stepping up,” Yun said.
Typically, first-time buyers make up 40 percent to 45 percent of the purchases, he said. Instead, most sales were homeowners who were trading up, he said.
Cheaper properties and lower mortgage rates pushed up homebuyer affordability to a record in the first quarter, according to the National Association of Realtors.
The average 30-year, fixedrate mortgage dropped to a record-low 3.66 percent this week, according to figures from Freddie Mac, the Federal Home Loan Mortgage Corp.
“Demand for resales should be supported mainly by the investor activity, supported by historically high affordability,” Yelena Shulyatyeva, U.S. economist at BNP Paribas, said before Thursday’s report. “Traditional buying to own and live in should continue to be limited by tight lending standards.”
New Jersey-based builder Hovnanian Enterprises Inc. is among companies that are more upbeat. The company reported a 52 percent increase in contracts in the second quarter compared with last year.
“It doesn’t feel like a head fake this year, it feels like it’s beginning of a recovery, so we’re very encouraged with what we’ve been seeing,” Larry Sorsby, chief financial officer, said at a June 13 conference.
Business, Pages 25 on 06/22/2012