WASHINGTON - Existing home sales decreased at a 2.2% annual rate to 5.66 million units sold in May, partly due to a closing backlog stemming from the expected tax credit expiration, the National Association of Realtors reported today.
April’s sales figures were revised higher to 5.79 million from 5.77 million reported last month. Sales in April surged 8.0% as buyers rushed to qualify for a tax credit, which expired at the end of April.
Economists polled by Thomson Reuters expected 6.15 million existing home sales in May, according to the median estimate.
The Senate approved an amendment last week to extend the closing period for the tax credit through Sept. 30. Buyers who signed contracts by April 30 were finding it difficult to meet the June 30 deadline of closing on their home because of backlogs.
It is “unclear” if the extension will ultimately become law, said Lawrence Yun, the NAR’s chief economist. About 180,000 homebuyers could be affected by the backlog and might not qualify for the tax credit, he said.
The amendment was added to the American Jobs and Closing Tax Loopholes Act of 2010, which also includes a two year extension of the Build America Bond program among other municipal bond provisions.
The median existing home sale price increased to $179,600, a 2.7% increase from a year ago. The price increased 4.2% from April.
The supply of existing homes fell to 8.3 months from 8.4 months in April. Yun said “it remains to be seen” if the inventory level will lead to price declines this year.
He also said the NAR “will be monitoring the Gulf [of Mexico] region to see if there is a confidence impact” resulting from the oil spill.
May represented “a last hurrah for homebuyer tax credits,” said John Lonski, chief economist for Moody’s Capital Markets Group, said in a report published Monday. He noted that mortgage applications have plunged in May following the tax credit’s expiration.
“This signal of a coming lull in housing activity warns of a deeper extended slide if weakness in home prices is further strained by falling stock prices and rents,” he said.
