WASHINGTON — Existing home sales slowed more than expected in May, dropping 2.2% to an annual rate of 5.66 million units, the National Association of Realtors reported yesterday.
Activity was damped by expiration of a home buyer tax credit April 30. Economists polled by Thomson Reuters had expected 6.15 million existing home sales in May, according to the median estimate.
“The drop was a bit of a surprise,” Diane Swonk, chief economist at Mesirow Financial, wrote in a research note. “Sales in June are likely to continue to slide.”
Lawrence Yun, NAR’s chief economist, said the tax credit is still supporting sales and will continue to do so through the end of June. Contracts had to be signed by April 30 to qualify for the subsidy, but buyers have until the end of this month to finalize the mortgage process.
Yun estimated that as many as 180,000 buyers may be unable to close on deals by that deadline and called on the government to give them more time. NAR supports Senate amendments to extend the deadline through September 30.
April’s sales figures were revised upward to a 5.79 million annual pace from the 5.77 million reported last month. Sales in April surged 8.0% as buyers rushed to qualify for the tax credit.