U.S. home resales decreased 26.6% on a year-on-year basis in May, the largest annual decline since 1982
The report from the National Association of Realtors on Monday also showed the smallest annual home price increase in more than eight years. The slump in existing home sales reflected closings on contracts signed in March and April, when nearly the whole country was under lockdowns to slow the spread of the respiratory illness.
Existing home sales fell 9.7% to a seasonally adjusted annual rate of 3.91 million units last month, the lowest level since October 2010. It was the third straight monthly drop. Economists polled by Reuters had forecast existing home sales would fall 3% to a rate of 4.12 million units in May. Economists believe the migration to suburbs from city centers could ease some of the housing shortage. A homebuilder survey last week showed strong demand in June for single-family homes in inner and outer suburbs featuring lower density neighborhoods.
“Although demand certainly dropped in March and April due to the crisis, supply dropped even more, and has thus far kept home prices from declining,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association in Washington. “We expect that home price growth will pick up over the summer due to insufficient supply levels.”
The economy contracted at a 5% rate in the first quarter, the sharpest since the 2007-2009 Great Recession.
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