Sales of U.S. previously owned homes unexpectedly fell in May as demand began to slip even before a government tax credit expires.
Purchases of existing houses, which are tabulated when a contract closes, decreased 2.2 percent to a 5.66 million annual rate, figures from the National Association of Realtors showed today in Washington. To receive a government incentive worth as much as $8,000, buyers must have signed contracts by the end of April and need to complete deals by the end of this month.
Builder shares dropped on concern the end of government stimulus, mounting foreclosures and unemployment may cause renewed weakness in the industry that precipitated the worst recession since the 1930s. Delays in processing contracts from last-minute buyers rushing to qualify for the tax break may also have contributed to the decrease, the agents’ group said.
Sales “will be pretty soft for the next few months,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, whose sales forecast was the closest among economists surveyed. “Ultimately, you’re going to need job growth to see a sustainable recovery in housing.”
Stocks fluctuated between gains and losses after the report as a positive sales report from Apple Inc. triggered a rally in technology shares, helping to overcome the housing data. The Standard & Poor’s 500 Index was little changed at 1,112.84 at 1:04 p.m. in New York. The S&P Supercomposite Homebuilder index fell 0.4 percent.
Less Than Forecast
Existing home sales were forecast to rise to a 6.12 million rate, according to the median forecast of 74 economists in a Bloomberg News survey. Estimates ranged from 5.2 million to 6.5 million. The group revised April’s sales rate up to 5.79 million from the 5.77 million previously reported.
Purchases of existing homes increased 18 percent compared with a year earlier prior to adjusting for seasonal patterns.
The median price climbed 2.7 percent to $179,600 from $174,800 in May 2009.