NEW YORK (Reuters) - Sales of existing home sales were down 3.8 percent in May and the median price for a home continued to fall, the National Association of Realtors said on Tuesday.
KEY POINTS: * The National Association of Realtors said sales doped 3.8 percent month over month to an annual rate of 4.81 million units, the lowest since November, after a downwardly revised 5.0 million unit pace in April.
MICHAEL MORAN, CHIEF ECONOMIST, DAIWA SECURITIES AMERICA, NEW YORK:
“It was very disappointing. We did not have any meaningful recovery in the homes sales market. We had adverse weather in some parts of the country in April which could have prevented some people from looking from homes, but a more likely explanation is that the demand for housing is generally soft and credit conditions are tight, which is putting pressure on the housing market.
“You can get some random volatility (on a month-to-month basis). But if you look at the trend in home sales, we have seen only a modest pickup from those we had during the recession. It’s a soft housing market. We are not going to see a meaningful recovery until we have clear evidence that prices have stabilized.”
“On the surface it’s a pretty soft report; but it implies that June existing homes sales should show a nice rebound.
“There were some crazy weather events from the flooding, rash of thunderstorms, tornadoes; that’s at least part of the explanation for some of the weakness. There was an impact from harsh weather in the Midwest, which was down 6 percent for the month of May, the largest percentage decline for all four regions.
“For existing homes sales we prefer to look at the 6-month average. If you look at the 6-month average, it’s just north of about 5 million homes right now, and has been ticking up very slowly since December. Data on a month-to-month basis can be choppy, but the 6-month data is slowly creeping.
“What’s much more important about what this says is about where prices are going. That is going to put a lot more pressure on consumers; declining value is going to put a severe strain on consumers. It’s important in that context, what does it say about where home prices are going?”
MICHAEL SHELDON, CHIEF MARKET STRATEGIST, RDM FINANCIAL, WESTPORT, CONNECTICUT:
“No surprise that the housing numbers were down once again for the month of May. However, the headline numbers was slightly better than forecast. Beneath the surface, the month’s supply, which is more widely watched by the market, increased once again on a month-over-month basis and continues to point to a sluggish outlook for the housing market in the near term.
“The most important issue for the markets over the near term (however) is what happens in Greece.”
TOM PORCELLI, CHIEF ECONOMIST, RBC CAPITAL MARKETS, NEW YORK:
“This one report does not change our long-term view in that we still believe the housing market will remain a drag on overall economic activity in 2011 and likely into 2012. We expect stabilization in 2012. I do not think this report sheds any new light and the housing market effectively remains in a state of depression.”
TOM DONINO, CO-HEAD OF TRADING, FIRST NEW YORK SECURITIES, NEW YORK:
“It came out exactly in line and I think that not one person will pay attention to this. There’s the obvious event that people are paying attention to, which is the Greek vote. So far it looks like people are expecting a positive outcome from that. If it doesn’t go that way, it’s anybody’s guess how much downside there could be.”
DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS:
“While suggesting that May existing home sales would prove the year’s low, the NAR did express concern over pending action in Congress to require a 20% down payment for home purchases that could dampen any recovery. The regional breakdown for May’s report showed no regions seeing increases, with the best being an unchanged outcome in the West, and the weakest being a 6.4% fall in the Midwest where bad weather was an additional problem. Distressed sales made up 31% of total sales in May, a decline from the levels seen in most recent months, and it may be that legal difficulties delaying foreclosures was a factor here.
“Price data reported monthly gains of 3.4% for the median and 2.0% for the average, but these gains are in part seasonal and April’s gains were revised down in both series. Yr/yr rates of -4.6% for the median and -2.9% for the average are both the least negative since November, which suggests that the market may not be quite as weak as the headline home sales pace suggests. Still, this is clearly a weak report. If pending home sales rebound in line with NAR projections that may temper pessimism on the state of the housing market somewhat, but even that may do little more than imply a stable underlying picture rather than the negative picture seen in the latest data.”
MARKET REACTION: STOCKS: U.S. stock indexes added to gains BONDS: U.S. bond prices eased, boosting yields slightly FOREX: The dollar was little changed