Existing Home Sales Rose 1.8% In May

The housing sector may not be on fire but it is showing strength. Existing home sales rose 1.8 percent in May to an annualized 5.530 million which, though only modestly above recent readings, is still the best rate of the cycle, since back in February 2007. The year-on-year rate, in line with a long run of flat sales, is soft at only plus 4.5 percent.

Details are solid led by prices where the median rose 3.8 percent in the month to $239,700. Still, like sales, the median is up only 4.7 percent on the year. Lack of available homes has been limiting sales though supply did rise 1.4 percent in the month to 2.150 million. This, however, is down 5.7 percent year-on-year. Supply relative to sales is unchanged at a very low 4.7 months.

Regional data show strength in the largest region which is the South, up 6.5 percent year-on-year at a 2.280 million rate, and strength for the smallest, the Northeast at plus 11.6 percent for a 770,000 rate. The West is the lagging region, down 1.7 percent year-on-year at a 1.180 million rate.

This isn't a spectacularly strong report but it may be a deceptive one. Prices are grinding higher and homes are moving into the market. Housing itself is only moderately strong but relative to other sectors is a standout performer this year.

Recent History Of This Indicator:
Sales of existing homes posted a strong 1.7 percent gain in April and another strong gain of 2.2 percent is expected for May where the consensus is calling for a 5.570 million annualized rate. Prices have been rising but haven't yet driven more homes to market as lack of supply continues to hold back sales. Still a big gain is expected, one that along with April's gain would point to household strength.