The decline was even more dramatic, 15.3 percent, compared with a year ago when spring sales surged ahead of the expiration of a home buyer tax credit.
But the start of this year’s spring home-buying season has coincided with a series of shocks — from March’s earthquake in Japan and a spate of floods and tornadoes in the South to a spike in oil prices caused by unrest in the Middle East. Weak economic data followed: Manufacturing slowed, the unemployment rate began to tick back up, and now sales of existing homes — already depressed by high foreclosure rates — have followed the trend.
The Realtors said May’s decline reflects the “slow pace of broader economic activity” and the market will rebound as the effects of severe weather and high oil prices wear off. The second half of the year will be “much stronger” for existing home sales, the group said in a prepared statement.
But housing economists still find plenty of reasons to be pessimistic.
“We’re just seeing this slow bleed where everything remains depressed,” said Mike Larson, a real estate analyst with Weiss Research in Florida. He blames the weak housing market on a glut of foreclosed homes.
The result, Larson said, is that “housing is just not a catalyst in this economy as it has been in past downturns.” Instead, “housing has really been an albatross around the economy’s neck.”
The upside is that home affordability is at a 40-year high, according to the Realtors group. The median price of an existing home fell 3.5 percent to $166,500, compared with the same period last year. That is 25 percent below pre-recession levels in 2006.
Median home prices in the West and Midwest saw the steepest declines from year-ago levels. The West is down 12.6 percent to $192,300 while in the Midwest, which was hit by floods in May, prices fell 8.5 percent to $136,400. In the Northeast, prices rose 6.1 percent to $241,500.
Meanwhile, in the South, which includes Washington D.C., median prices fell 3.1 percent to $149,200. The median price of a single-family home in the District fell about 2 percent to $330,400, according to the Realtors’ data.
Few consumers are willing to take advantage of the lower home prices, however, due to the weak job market, said Mark Vitner, a senior economist at Wells Fargo who tracks the U.S. housing market.
“If you feel less secure in your job, you’re less likely to be buying a home,” Vitner said.