U.S. existing home sales tumbled 9.7% in May to the lowest level since late 2010 as COVID-19 plunged the nation into recession and chilled transactions.
Sales of single-family houses, condominiums and cooperatively owned apartments fell to a seasonally adjusted and annualized pace of 3.91 million last month, the National Association of Realtors said in a Monday report. The decline was a slower pace than the 17.8% drop in April that was the biggest retreat in almost a decade.
The median price in May rose 2.3% from a year earlier to $278,200, the smallest annual gain since February 2012 when the housing market was starting to recover after the Great Recession, NAR said.
Sales in the report are based on deals negotiated in March or April when much of the U.S. economy was shuttered as state governors issued stay-at-home orders to try to stem the spread of COVID-19. May marked the third consecutive monthly decline in sales, NAR said.
Based on an early look at May’s contract signings, known as pending sales, last month likely was the bottom for home sales, said NAR’s Chief Economist Lawrence Yun.
“I am very confident this will be the cyclical low point,” Yun said. “Just looking at the housing sector itself, it looks to be a V-shaped recovery. For the rest of the economy, it may not be a V-shape.”
One bright spot was an increase in the supply of homes for sale. A lack of inventory has plagued the housing market because of years of underbuilding by the nation’s contractors, Yun said.
Inventory in May rose 6.2% from a month earlier to 1.55 million, NAR said, though the supply of homes for sale was down 18.8% from a year ago.
Measured as a month’s supply, meaning the time it would take to sell off the entire stock at the current sales pace, inventory rose to 4.8 months compared with 4.3 months in May 2019, Yun said.