WASHINGTON — Despite falling mortgage rates, sales of existing homes dropped 5.6% in May to their lowest level in 16 months, the National Assn. of Realtors reported today.
The real estate trade group said existing single-family homes were sold at a seasonally adjusted annual rate of 3.21 million units last month. The previous low was 3.2 million units in January, 1988.
The drop in May followed sales of 3.4 million units in both March and April, down 2% from February. The May resale rate was off 11.3% from the rate a year earlier.
The weakness in sales this year has been attributed to rising home mortgage rates, reflecting efforts by the Federal Reserve to fight inflationary pressures by tightening the supply of credit.
The Fed has been easing its grip on credit recently. Fixed-rate mortgages have fallen from a high of 11.22% in March to 10.48% at the end of May, according to the Federal Home Loan Mortgage Corp.