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Existing-home sales in the Northeast plummeted in May

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WASHINGTON (AP) — Existing home sales in the United States plunged 9.7 percent in May. It was the third straight monthly decline and further evidence of the harm the virus pandemic has done to the housing market.

The National Association of Realtors said Monday that the monthly decline pushed sales down to a seasonally adjusted annual rate of 3.91 million, the slowest pace since a home buyers tax credit expired in October 2010.

Sales fell in all regions of the country, with the biggest decline coming in the Northeast, where virus infections were especially heavy.

Sales of both existing and new homes have fallen sharply during the traditional spring selling season as communities were locked down to prevent the spread of the coronavirus.

Sales in the Northeast slumped 13.9 percent from the previous month, while sales in the West fell 11.1 percent. Sales slid 10 percent in the Midwest and 8 percent in the South.

The median price of a home sold in May was $284,600, up 2.3 percent from a year ago.

Lawrence Yun, chief economist of the realtor association, said based on anecdotal reports, he believed May could turn out to be the bottom for the housing market, with sales showing a V-shaped recovery in coming months. However, many private economists believe the recovery from the disruptions caused by the coronavirus could take much longer.

Mike Fratantoni, senior vice president and chief economist for the Mortgage Bankers Association, expects prices to climb even higher due to a lack of inventory.

“The most noteworthy data point in the May existing-home sales report was that existing housing supply last month was down almost 19% compared to a year ago,” Fratantoni said. “As buyers are returning to the market, as evidenced by the strong, nine-week rebound in MBA’s purchase application data, the lack of homes for sale will be a real constraint. 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. We expect that home-price growth will pick up over the summer due to insufficient supply levels.

“The market is supported by strong demand from first-time home buyers, who represented 34 percent of home purchases in May. Millennial-driven demand will be a tailwind for the market for the next several years.”

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