The real story on May Existing Home Sales: The Supply Surge Continues
* Sales dropped 0.3% to a seasonally adjusted annual rate of 5.99 million from a revised 6.01 million SAAR in April (previously reported as 5.99 million). That was right in line with economists' forecasts. May sales were down 10.3% from 6.68 million a year earlier.
* Inventory came in at 4.431 million single-family homes, condos, and co-ops. That was up 5% from 4.22 million in April, up 23.5% from 3.589 million in May 2006, and a fresh record high. On a months supply at current sales pace basis, inventory was 8.9 months, up from 8.4 in April and 6.4 a year earlier. That was the worst reading since June 1992.
* Median prices rose 1.8% to $223,700 in May from $219,800 in April. April's figure was previously reported as $220,900. But prices were down 2.1% from $228,500 in May 2007. That was the tenth straight year-over-year decline in prices, the longest such losing streak on record.
Anyone hoping the housing market would flower in May will be disappointed by the latest numbers. Sales dipped slightly to the lowest level since June 2003. Home values slumped, extending a record-breaking streak of year-over-year median price declines to 10 months.
Most importantly, the supply of homes for sale ballooned. We now have a whopping 4.43 million homes, town houses, condos, and co-ops sitting out there looking for buyers. That's the highest level ever, and roughly twice what was customary in the late 1990s and early 2000s. The only way we're going to chip away at this Mount Everest-sized pile of inventory is by price cuts, and so far, sellers haven't been aggressive enough. In other words, don't look for a lasting bottom in the housing market anytime soon.