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The National Association of Realtors released the existing home sales report and it showed a drop of 1.2 percent in May. The majority of the housing slowdown occurred in the Northeast (4.2 percent) and the Midwest (3.8 percent). The South and the West showed modest gains.

David Lereah, chief economist for the NAR, says that the market is showing the classic pattern for a soft landing. Considering the huge run up that was experienced in the Northeast the last 5 years it is my opinion that the region is doing very well presently and if it can hold the majority of its gains people will be doing very well.  

Of course, the real estate market is entering a period where it will be very sensitive to how the Federal Reserve handles interest rates over the coming few months. If they continue to raise the rates, there will be much more pressure on those holding ARMs and other variable loans and can create a much more volatile environment for the housing sector.

The National Association of Realtors reported Tuesday that sales of previously owned homes dropped by 1.2 percent in May to a seasonally adjusted annual rate of 6.67 million units.
The median price of the homes sold in May rose to $230,000 in May, up 6 percent from the same month a year ago. That represented a slowdown from huge double-digit price gains last year at the peak of the housing boom.

By region of the country, sales fell by the largest amount in the Northeast, a drop of 4.2 percent. Sales were down 3.8 percent in the Midwest.

Sales of existing homes managed to post small gains of 0.7 percent in the West and 0.4 percent in the South.

Analysts said this is a classic pattern for a cooling housing market with sales starting to lag under the impact of rising mortgage rates.

David Lereah, chief economist for the Realtors, said he expected sales to fall by 6.8 percent from last year’s record pace. Sales had surged to record levels for five consecutive years as buyers responded to the lowest mortgage rates in four decades.

But with mortgage rates climbing steadily under the impact of credit tightening by the Federal Reserve, analysts look for housing to slow this year but not to crash. via Chippewa.com

Related posts:

1. Home Sales Inch Up in March 2006 While Inventory Grows Quickly
2. Existing home sales rise 2% in August, 2005
3. April 2007 Existing Home Sales Fall 2.6 Percent
4. Home Sales Booming In South Carolina
5. Toll Brothers See New Homes Sales Slow Down