US existing home sales dip again in May, but stabilisation seen ahead

Existing home sales in the States fell for a fourth straight month in May with economists divided on the reasons behind the slowdown.

According to the National Association of Realtors, existing home sales fell by 0.9% month-on-month to reach an annualised pace of 5.8m (consensus: 5.72m).

They were up 44.6% on the same month one year back, although as NAR chief economist Lawrence Yun pointed out, even then they were now just approaching their pre-pandemic level.

The median price for existing homes of all types was 23.6% higher from a year before at $350,300.

At 1.23m units, the total housing inventory stood at just 2.5 months worth of sales, down from 4.6 months' worth in May 2020.

For Yun, the low housing inventory remained the "overwhelming" factor behind the decline in sales, even if lower affordability was pushing some first-time buyers out of the market.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, disagreed, telling clients: "We think the real story more likely is that demand for single-family homes in the suburbs has faded as Covid has retreated.

"Mortgage demand now seems to have stabilized slightly below the pre-Covid level, and sales will settle at a level consistent with that - about 5.2M - over the next couple months."