The pace of existing home sales in the United States was off slightly in May to a 5.99 million-unit annual rate, the National Association of Realtors said in a report on Monday that showed continued weakness in the housing sector.
Sales were off 0.3 percent in May and hit their lowest level since June 2003 when the pace was 5.94 million units.
The inventory of homes for sale rose 5.0 percent to 4.43 million units at the end of May which represents 8.9 months' supply at the current sales pace. That is the highest months' supply since June 1992, although the 1992 figure only includes single-family homes while the current data also includes condos.
Economists polled by Reuters were expecting home resales to fall to a 5.98 million-unit pace from the 5.99 million-unit rate initially reported for April. The April sales pace was revised to a 6.01 million unit rate.
U.S. government bond prices traded steady at higher levels on Monday after existing home sales data came in near expectations and did not alter the interest rate outlook from the Federal Reserve.
U.S. stocks were little changed.
It doesn't look as if there are any signs of a turnaround yet. The reaction in the financial markets was limited because the home sales numbers came in pretty much as expected, said Gary Thayer, chief economist with A.G. Edwards and Sons, St. Louis, Missouri.
May saw the 10th straight month in which prices dropped from year-ago levels, with the national median price down 2.1 percent to $223,700.
The higher inventory level was a major concern because the stock of homes continues to outpace consumer demand said Lawrence Yun, senior economist with the trade association. This is uncomfortably high inventory, he said. It was last this high in the middle of a market slump.
Yun said he was puzzled why consumers are not sopping up more of the available homes since employment is high and wages are strong. Home builders should ease off on construction while inventories remain elevated, he said.
Homes sales were mixed across the regions with the Northeast seeing a 5.8 percent increase for the month while the Midwest saw a 0.7 percent rise. The West and South reported a drop-off in sales with 0.8 and 3.4 percent declines respectively.