Sales of previously owned homes in the U.S. continued in May to fall below levels of a year earlier, despite lower prices and tax incentives for buyers, according to figures released by a trade group Tuesday.
May home sales were down 3.6% from the same month last year, the National Assn. of Realtors reported. The industry group based that figure on the seasonally adjusted annual rate of home sales, which is the number of homes that would sell for the entire year based on May's sales rate.
At that pace, 4.77 million homes would be sold this year, which would not match the previous May's annualized sales rate of 4.95 million homes. The actual number sold last year, however, ended up at 4.91 million homes.
The Realtors group, nevertheless, noted that May sales this year increased from the previous month, aided by historically low mortgage interest rates and an $8,000 federal tax credit for first-time buyers, said the organization's chief economist, Lawrence Yun. But a sales increase is typical from April to May, which is usually one of the stronger months for home sales.
The total number of homes sold in May was 451,000, or 6.6% below the year-earlier number, but it was up 9.2% from the 413,000 homes sold in April.
The median U.S. home sales price for May was $173,000, down 16.8% from the previous May, the Realtors group reported.
First-time home buyers accounted for 29% of May purchases, up from about 19% of sales a year earlier but down from 40% a month earlier. Repossessed and distressed properties made up 33% of sales.
Yun noted that first-time buyers are concentrated in the lower-priced segment of the market, which is also where most distressed sales occur.
The Realtors group's data show a dramatically different home sales picture across regions.
In the West, where foreclosures abound and prices have fallen more sharply than in the rest of the nation, the number of homes sold rose 8.7% in May over the previous year. Those gains were offset by double-digit declines in the South and Northeast and an 8.5% drop in the Midwest.
The number of homes on the market fell 3.5% to 3.8 million in May, the report said. At the current sales pace, it would take 9.6 months to sell those homes, compared with 10.1 months in April. The historical average inventory level is a supply of about six months.
As falling prices attract buyers, rising interest rates present another challenge to the housing market. The rate on a 30-year fixed loan has averaged 5.42% this month, up from 4.86% in May, according to Freddie Mac. The rate reached 4.78% in April, the lowest level since records began being kept in 1972.
Yun said some sales were delayed or canceled because of "faulty" appraisals. He said buyers have been rejected for loans because of appraisals that give undue weight to foreclosed-home sales.
Richard Dugas, chief executive of Pulte Homes Inc., one of the nation's largest home builders, told an industry conference Tuesday that sales would continue to be sluggish.
Dugas said low consumer confidence and difficulty obtaining mortgages would continue to weigh on sales.
"I'm not here today before you to call a bottom for our industry," he said.
Another sign of housing-market stress came from the Federal Housing Finance Agency, which reported that serious mortgage delinquencies were on the rise. The number of borrowers at least 60 days behind on mortgages owned or guaranteed by Fannie Mae and Freddie Mac rose to 1.1 million from 926,000 in the fourth quarter, the agency said Tuesday. The overall delinquency rate rose to 3.62%, from 3.03% the previous quarter.
McLean, Va.-based Freddie Mac and Washington-based Fannie Mae own or guarantee $5.3 trillion of the $12 trillion in U.S. residential mortgage debt.
The firms modified 37,328 loans in the first quarter, up from about 23,777 in the fourth quarter, the report showed.