US home sales unexpectedly fell in May as an acute shortage of properties on the market pushed house prices to a record high.
The National Association of Realtors said on Wednesday that existing home sales slipped 0.4 per cent to a seasonally-adjusted annual rate of 5.43 million units last month. It was the second straight monthly decline in sales.
April's sales pace was revised down to 5.45 million units from the previously reported 5.46 million units.
Economists had forecast existing home sales rising 1.5 per cent to a rate of 5.52 million units in May. Sales rose in the North east, which accounts for a small fraction of the market. They fell in the West, South and Midwest.
Existing home sales, which make up about 90 per cent of US home sales, dropped 3.0 per cent on a year-on-year basis in May. They have declined on a year-over-year basis for three straight months.
Home sales have largely treaded water this year as strong demand depletes the supply of properties on the market, causing house prices to rise faster than wages.
Supply has been especially tight at the lower end of the market, which accounts for a large portion of the housing market. With mortgage rates rising back to seven-year highs, purchasing a home could become even more expensive for first-time buyers. Housing demand is being driven by the lowest unemployment rate in 18 years.
There were 1.85 million previously-owned homes on the market in May. While that was up 2.8 per cent from April, housing inventory was down 6.1 per cent from a year ago. Supply has declined for 36 straight months on a year-on-year basis.
At May's sales pace, it would take 4.1 months to exhaust the current inventory, up from 4.0 months in April. A six-to-seven-month supply is viewed as a healthy balance between supply and demand.
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