May sales of existing homes were down 2.2% versus a surge in April, says the NAR. However, May closings were 19.2% above those of May 2009.
New home sales in May were 32.7% below April sales and 18.3% below sales in May 2009, according to Census Bureau data.
Overall home prices rose 0.8% in April versus a month earlier, according to the latest available data from the Federal Housing Finance Agency (FHFA). For 12 months through April, U.S. home prices fell 1.5%. April prices were 12.8% below their peak in April 2007.
The year to year improvement in existing home sales was due largely to the federal home buyer tax credit, explained Lawrence Yun, NAR chief economist.
"We are witnessing the ongoing effects of the home buyer tax credit, which we'll also see in June real estate closings," he said. "However, approximately 180,000 home buyers who signed a contract in good faith to receive the tax credit may not be able to finalize by the end of June due to delays in the mortgage process, particularly for short sales."
Some delays were caused by an interruption in the National Flood Insurance Program. The Gulf of Mexico oil spill has also impacted sales in Florida and Louisiana, he explained.
May's sharp drop in new home sales brought the sales ratesome 300,000down to its lowest level since 1963, analysts reported. As a result of the sales decline, supply on the market rose to 8.5 months, a strong up tick from April's 5.8 month supply. The actual number of homes on the market is the lowest since 1970, another indicator of how badly the housing market has been affected by the economic downturn, analysts said.